SharkJumping

Left Behind Games is a small video game publisher () which went public in a reverse merger in February, 2006.  It has one asset, the exclusive license to the massively popular, Christian-themed, Left Behind book series, and its initial PC game will ship November 7.  So how would one value a start-up company with a possibly strong license, $12M in negative shareholder equity and no track record of delivering top-selling product?

Apparently, the public markets should value a company like this at an astonishing $128M!  That truly takes a holy man to understand, especially the 20% rise in the stock today.  Let's pretend the game sells 100K units or even 200K, which would constitute a good hit - that would give it $2.5-5M in revenue for 2007, valuing it at 25X Revenue, or 6 times higher than any other public game company.  Even more amusing is that the company just sold 3.8M shares in a private offering for $1.50 a share, yet the stock is now at $7.21, 2 weeks after it closed the offering.  And I forgot - there has never been a successful religious-themed video game.

So unless you consider this to be a donation, I would avoid this stock like the plague at current valuations.  It's possible Left Behind creates a monstrous hit like Mel Gibson did with the movie Passion of Christ, but it's about as likely as hitting the lottery at this price.