Making money in the virtual world is easy. It's real-world finances that elude even trained economist and stock speculators.
It's a sign of the times, then, that the most profitable public offering of stock so far this year comes from little-known Shanda Games (NASDAQ: GAME).
To find out just how many bags of money Shanda made on the NASDAQ and why this means big things for gaming companies, read on below the fold.
Shanda is a big name in China, but in America its reputation is relatively unknown. The Shanghai-based developer released Ragnarok Online and more recently The World of Legend, home to one of the largest Chinese in-world game protests in memory. Though a small presence in the U.S., Shanda brought in nearly $157 million in revenue last year.
Here's what's so unique about Shanda and gaming companies in general. The first quarter of this year was universally regarded as a recession by economists. Stocks were mostly flat, banks continued to suffer. But Shanda increased its revenue by over 40%, to $322 million. Talk about a stock running counter to the world economy.
So what about Shanda prompted its stock to sell 30% more than expected in its initial offering on the Nasdaq? More people are playing online games, and those who are joining are more willing to monetize their experience through real-money transactions (RMT). Shanda profits three ways: Initial game sale, monthly subscription, and a cut of real-money transactions.
Shanda's stock sold out (and then some) because prescient investors realize the future is in online gaming technology. With broadband and Internet access no longer a problem for the vast majority of potential gamers, and Hollywood openly singing the praises of virtual worlds, it was only a matter of time until online gaming's tens of millions of players doubled again.
We'll be following Shanda as its stock dips and spikes along with the market. What are your thoughts? Would you invest in Shanda Games?