We do not marvel at this company’s stock anymore
Update on Marvelous! outlook
In April of this year, 2021, we detected a major catalyst for Marvelous! as presented in this article (LINK). Their aging game, Sword and Magic Logres Ancient Goddess, had just gained major traction following a collab with the very popular mange and anime “That day I got reincarnated as a slime”.
Since then, we are worried about 3 things:
- We think we overestimated the revenue impact to Marvelous. The game is published by them but developed by Aiming Inc, who is likely getting a good portion of the revenues, at least in the first year of the game being out
- Whilst it was a major up in revenue, it very quickly dwindled back to pre-release after less than a month of existence.
- The stock is in a downtrend and we think there are better opportunities out there
Based on the above, we closed our position and took our -9% loss (whilst the NASDAQ was up)
Decrease in revenue and stock appreciation is a strong signal to take your gains
As one can see on the daily estimated revenue chart, there was a daily revenue spike that led us to buy in April, but those revenues fumbled pretty quickly. This was, after-all, just a very successful update to a long-standing game.
We had envisioned it would
- Stay for a couple months in the top #20 grossing in Japan – it did not
- Solidify the game’s revenue at higher levels on the long trend – it did not
Here is a chart of our estimated revenue as a moving average of 8 days (blue), against the share price (red) for Marvelous!
The stock did not appreciate one bit on the success, it just kept going down. Basically, no one reacted, and we should probably not have either.
Nobody likes to take a loss, but we think that we’re better off taking this one off our capital gains taxes this year, as we are not seeing any reason for a much more positive outcome at this stage.
Conclusion
It’s a disappointment, but we try hard not to fall in love with the company we research. It seems we were wrong about Marvelous! catalysts. The game update success was short-lived and we think there are not a lot of reasons to wait for better days. We sold on July 11th at JPY 732, cried a little, took our loss and moved on. Marvelous! Is now in our Closed Pick list, a forever proof that mistakes are made, and we should learn from them.
Below is our Buy/Sell chart for Marvelous! :
