MIAMI - Motorsport Games Inc. (NASDAQ:MSGM), a developer and publisher of racing games and provider of e-sports ecosystems, has sold its gaming media outlet Traxion to Traxion.GG Ltd, a UK-based subsidiary of Grid Finder Ltd. The $250,000 transaction, announced today, includes $200,000 in cash and $50,000 in future marketing commitments.
The sale is part of Motorsport Games' strategy to streamline operations and focus on its core business of developing high-quality racing games. The company retains the right to use Traxion's video platforms for future broadcasts of its Le Mans Virtual Series and 24 Hours of Le Mans Virtual events. Stephen Hood, CEO and President of Motorsport Games stated that this move is intended to leverage market value elements and bring cash into the business.
Traxion, which has been recognized for quality racing game journalism, is expected to continue under the new ownership with the original team. Thomas Stapley-Bunton, CEO and Founder of Grid Finder, expressed enthusiasm about the acquisition, citing Traxion.GG's reputation in the online racing and sim racing community and the potential to integrate Grid Finder's community management tools and marketplaces with Traxion's content.
Motorsport Games is known for its licensed video game development and publishing for major racing series, including the 24 Hours of Le Mans and the FIA World Endurance Championship. The company also owns rFactor 2 and KartKraft simulation platforms and has been recognized as an esports partner for the 24 Hours of Le Mans through its Le Mans Virtual Series.
This transaction reflects Motorsport Games' ongoing efforts to refine its business model and concentrate on areas that align with its strategic goals.
The information is based on a press release statement from Motorsport Games.
InvestingPro Insights
In light of Motorsport Games Inc.'s (NASDAQ:MSGM) recent sale of its gaming media outlet, Traxion, to Traxion.GG Ltd, it's pertinent to consider the company's financial health and market performance. According to InvestingPro data, Motorsport Games holds a market capitalization of just $6.13 million. This reflects the company's relatively small size within the gaming and esports industry.
The company's revenue for the last twelve months as of Q4 2023 was reported at $6.91 million, with a notable decline of 33.08% from the previous period. Furthermore, the gross profit margin stands at a healthy 47.6%, although this is overshadowed by significant challenges such as an operating income margin of -222.94%, indicating considerable losses relative to its revenue.
Two InvestingPro Tips that may be particularly relevant to investors considering the context of the article include the fact that Motorsport Games is trading at a low revenue valuation multiple and that the stock has taken a big hit over the last week, with a 1-week price total return of -14.12%. These metrics may offer insight into the company's current valuation and recent market trends following the announcement of the Traxion sale.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available, such as the company's cash burn rate and its balance sheet health, which includes details on how short term obligations exceed liquid assets. Motorsport Games' stock price volatility and historical performance over the last decade, year, and five years also provide a broader perspective on the company's market standing. To explore these insights further, visit https://www.investing.com/pro/MSGM, and don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
With the company's next earnings date slated for May 10, 2024, investors and industry watchers will be keen to see how the sale of Traxion and the refocused strategy on game development impacts Motorsport Games' financial outcomes and operational efficiencies in the coming quarters.
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