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    Fair value estimates of decentral.games

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    • M
      malatestashat last edited by

      Does anyone have a fair value estimate of decentral.games and $DG? If so, I'd be interested to see your model and assumptions! Thanks.

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      • E
        eGamez @malatestashat last edited by

        I will take a wild stab at answering what the fair value of $DG is with 3 comparisons.

        Starting Assumptions:
        For simplicity (right or wrong), I will treat $DG as common stock for a US company. Shareholders typically have voting privileges and earn returns in the form of dividends, which is similar to staked $DG. This comparison should not be taken literally since there are no regulations covering blockchain ownership and rights to the underlying entity or profits.

        The Numbers:
        I have only been able to gather data for 5 weeks on DG treasury numbers. The most important number is Gameplay Treasury, since it indicates the size of casino revenue being brought in. From 3/15/2021 to 4/12/2021, the revenue brought in is around $108k per week. Extrapolating forward into a year would give a casino revenue forecast of $5.6 million/year.

        Comparison 1 – Brick-and-Mortar Casino:
        I used the MGM annual report on casino revenue to make a rough comparison. MGM casino revenue for 2019 (Pre-pandemic) is $6.4 Billion with a company market cap of ~ $16.4 Billion (Jan 2020). $DG has 203,819 tokens in circulation right now. In this casino-to-casino comparison, the fair value of $DG would be $70.44.

        Comparison 2 – Tech Company:
        Since a crypto VR casino has very different expenses from a brick-and-mortar casino, some may want to compare DG valuation to a tech company. Unfortunately, the spending expenditures for the DG team are not well known and some huge assumptions are about to be made here. Using a tech average profit margin of 21.74% and applying it to DG estimated yearly revenue, we would get a forecast of $1.17 Million earnings. At a tech sector average of 28 P/E, the fair value of $DG would be $156.17.

        Comparison 3 – The Netflix Trajectory:
        For companies that have high future trajectories, it is typical to see much higher P/E ratios because the business model is expected to be disruptive and highly profitable. You can see P/E ratios up to 1000x for companies such as Tesla and Shopify. For DG, I would prefer using Netflix as an example since it was a new business model that was successful in bringing their product into the lives of billions of people. I see DG doing the same with their crypto VR casinos in the future. Netflix P/E averaged around 200 and the growth has matched its lofty valuations for nearly a decade. Using 200 P/E and the previously assumed earnings forecast, the fair value of $DG would be $1,156.80.

        Stray Observations:
        -DG casino revenue size is currently 0.013% compared to the total US casino revenue market. It is still very early.
        -$DG coins are capped at 1 million and are expected to be put in circulation within next 4 years.

        Disclaimer:
        I currently own $DG tokens.

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          malatestashat @eGamez last edited by

          @egamez Thanks! That was great! What do other people think?

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