Video games group scores a tenfold rise in share price
VIDEO games group Keywords
Studios joined Aim in 2013 at 123p a share. Midas recommended the shares two years later when they were worth 153p. Today, they are at 1644p and the firm’s market value is more than £1billion.
The extraordinary performance is down to a combination of right place, right time and excellent management.
The video gaming industry generates about $110 billion (£85billion) of revenue every year and it is growing at more than 6 per cent annually. Keywords does not create games but it provides all kinds of related services, including translation, artwork, voice-overs, testing and customer support.
As gaming evolves, more and more developers are turning to Keywords for help, particularly as the company becomes larger and more established. It even provides graphics for Ikea’s augmented reality service, which allows customers to test online what furniture might look like in their own home.
Last week, Keywords took another big step, with the $66million acquisition of VMC, a US specialist in testing and customer support. To fund the purchase and leave some cash to spare, Keywords raised £75million, placing new shares with investors at 1400p. Shareholders were so enthused by the deal that the stock ended the week more than 15 per cent ahead of the placing price.
Midas verdict: Keywords has come a long way fast but its market share is still little more than 5 per cent, even after the VMC deal. Chief executive Andrew Day is confident therefore that the business could become much bigger. Shareholders who bought at 153p should definitely take some profits at current levels, but selling out completely would be a mistake. Gaming is a growth industry and Keywords is in the thick of it.
Traded on: AIM Ticker: KWS Contact: keywordsstudios.com or +353 1 902 2730