Zengame Technology
Thesis
Zengame Technology is currently undervalued, trading at a low multiple of earnings and free cash flow, with a strong balance sheet featuring no debt and a significant cash position. Despite a recent decline in revenues and earnings, the company's valuation suggests it is priced for perpetual decline, presenting an attractive opportunity for investors. The management team has a solid background in gaming, and the company's flagship games continue to perform well in the market.
Did it work?
The long thesis argued Zengame was priced for perpetual decline despite a debt-free balance sheet, large cash position, and resilient flagship games. The stock subsequently returned +101.3%, more than doubling, which is consistent with the market correcting the undervaluation the pitch identified. While the elapsed time is unknown and the thesis stated no explicit horizon, a doubling of the share price is a decisive validation of the core value/re-rating argument.