Left Behind Games is in the business of developing and publishing video game products based upon the Left Behind series of novels. The Company also derives revenue from in-game advertising consisting primarily of fixed product placement. The Company focuses on developing products that are Christian based and offer a less graphic experience to sexual themes and gratuitous violence.
News:
On Friday 6/19/09 Left Behind Games released some pivotal news that could jump start the company to some big sales. They announced that Wal-Mart, the nations largest retailer, has approved a test market in many of their stores for the company's video games. In addition, LFBG.OB is in the process of hiring new marketing representatives throughout the U.S. to directly market to other retailers, large churches and Christian groups. As a result of that news release Friday morning, the stock exploded over 400% to finish at $0.07/share. With a little over 200 million shares outstanding, the stock could have quite a bit of room to move.
Fundamentals:
At first glance you might be scratching your head regarding whether this company's concept of Christian themed video games can really make money. I'll offer a few strong points as to why it could do very well:
Profitable - The company has weathered the development phase in establishing its products. According to the one of the company's recent filings, because so much time and money in past years went towards development, it currently only costs LFBG.OB $1.50 to produce each video game unit. The games retail for around $20.00 a piece. So, you can see that the margin is ridiculously high.
Untapped Market - We all know how big the video gaming industry is. Software sales of video games are expected to exceed $21 billion dollars in the next 4 or 5 years. The company is already at the forefront of the Christian theme videos games. So, it is reasonable to project that even a small penetration of this niche could yield huge dollars.
Brand Recognition - As stated earlier, The Left Behind video games are based on the extremely popular Left Behind Book Series. These books have sold around 65 million copies in the last 10 years. Although it may or may not be that familiar to you, the brand itself has an unbelievable following.
Remember "The Passion" - In 2004 Mel Gibson took a leap of faith by personally developing and financing the blockbuster movie, "The Passion of Christ". He basically had to go about it alone, because no one believe that people would be interested in seeing a Christian based movie. He had a limited marketing budget and basically went directly to churches in hopes of gaining viewer support. To make a long story short, the movie went on to be one of the highest grossing movies of all time and it has been estimated that Mel Gibson and his production company grossed nearly $1 billion when factoring in international sales, DVD sales and television rights.
I think it's safe to say that Christians aren't a bad group to market.
Technicals:
The stock has done virtually nothing over the past year. It had a high of about $6 a share about 3 years ago, but with some dilution over the years, it probably equates to around $1.50 - $2.00 a share now. However, the company has never been in a better position to really do some big things until now. So, for the sake of looking at technical indicators to see if the stock can potentially move higher, I'll focus just on the chart from Friday.
As you can see from the chart, the stock surged to $0.14/share around the first hour of trading. After a 50% re-tracement, the stock consolidated by settling between $0.065 - $0.08 per share the last 3 hours of the trading session. You can tell by the two high volume buy spikes in the last hour that the MM's were in share collecting mode after the morning spike. If a 2 million share buy can't even move the stock a penny, you know they were in control. However, MM's are more inclined to run a stock the next trading day if there's been a satisfactory re-tracement (50% is standard because all these MM's are just computer based algorithms anyway) coupled with a push from new buyers. With so many buyers at or above the current share price and such a compelling story, I'll guarantee that they'll be a gap up Monday morning.
Conclusion:
With the press release occurring on a Friday, there really was not a lot of time available for investors/traders to do any thorough due diligence for such a relatively obscure company. Of course the fact that Wal-mart is willing to sell their product is the main reason for the quick surge in the stock price. However, I think it is clear that this company has great potential and that others will want to invest come Monday. I've haven't even mentioned the award winning CEO who happens to be one of the founding developers of the popular 3D Madden Football games. I tend to be a bit hesitant of stocks that have already had a big run-ups. A lot of times, it's "even money" if the stock continues to rise or tanks the next trading session. However, although I can't guarantee it, all the signs are pointing to this one having a big follow up day. I can't say that I have a good feel for entry or exit points, but if things go well, we'll see 20 cents or more tomorrow. Personally, I'd be content with that. However, with such strong prospects, it wouldn't at all surprise me if a lot of people put this one in their long term portfolio. LFBG.OB potentially the next perfect stock.
