This morning, Enthusiast Gaming announced that it has sold various website assets for 4.5x sales. We think this provides a solid read-through for the takeout value of PMKR’s assets. EGLX sold a portfolio of video game editorial websites for a purchase price of C$6.8M, representing 4.5x sales. The sale included Destructoid.com, Siliconera.com, Upcomer.com, PCInvasion.com, Operationsports.com and EscapistMagazine.com, along with their respective social media handles. We note that these are legacy assets and that EGLX’s main websites would likely sell for an even larger premium. While this is not an apples-to-apples comparison given that PMKR focuses on sports media, we think this emphasizes how cheap PMKR stock is currently. PMKR trades at 2.2x 2022E sales and 1.9x 2023E sales, a steep discount to the 4.5x that EGLX fetched for its media assets. At 4.5x sales, PMKR would be worth C$1.00/share, representing 170% upside. We would also like to note that we believe PMKR’s assets are much higher quality and more profitable, evident through 26% EBITDA margin in Q2 compared to EGLX’s -8%. Therefore, there is a justification for an even higher premium, such as the 6.0x we use to calculate our target price.

Dry Powder for Acquisitions: Subsequent to Q2, Playmaker announced an agreement with Beedie Capital for a convertible loan facility of $20M. This includes an initial advance of $15M and subsequent advances in $2.5M increments. The terms include a 9% interest rate on the advanced funds, a 1.25% interest rate on the unadvanced portion, and a convert price of $0.70/share. This comes in addition to the $15M multi-year credit facility that PMKR secured in Q1 with the potential to be increased by $11M upon a $10M equity raise. The additional dry powder will allow PMKR to continue aggressively executing on its M&A strategy. Our Thoughts: We reiterate that we are very impressed PMKR’s rapid execution of its M&A strategy (eight acquisitions since November), effectively positioning itself to take advantage of sports betting regulatory changes in its markets (Canada, Brazil, Argentina, U.S.) and the FIFA World Cup in Q4. PMKR continues to trade at a discount to slow-growth traditional media companies (NWSA:US, NXST:US, NYT:US) that trade at 11x EBITDA on average, despite growing 10x faster than the group; creating a compelling value opportunity. We are maintaining our BUY rating and C$1.25/share target price based on 6.0x 2023E sales.