Motorsport Games Inc. (NASDAQ:MSGM) Earnings Report Analysis

Motorsport Games Inc. (NASDAQ:MSGM) is a company that specializes in developing and publishing racing video games. It is part of the broader gaming industry, which includes competitors like Genius Group Limited, Versus Systems Inc., Cosmos Health Inc., Magic Empire Global Limited, and Mobile Global Esports Inc. These companies are evaluated based on their financial metrics, particularly focusing on their Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC).

For MSGM, the ROIC is -28.03%, while the WACC is 13.73%. This results in a ROIC to WACC ratio of -2.04, indicating that MSGM is not generating sufficient returns to cover its cost of capital. This is a critical measure as it reflects the company's efficiency in using its capital to generate profits. A negative ROIC compared to WACC suggests that the company is losing value on its investments.

In comparison, Genius Group Limited (GNS) has a ROIC of -29.47% and a WACC of 25.16%, resulting in a ROIC to WACC ratio of -1.17. Although GNS also has a negative ROIC, its ratio is less negative than MSGM's, indicating a slightly better position in terms of capital efficiency. However, it still fails to cover its cost of capital.

Versus Systems Inc. (VS) presents a more challenging scenario with a ROIC of -47.17% and a WACC of 16.17%, leading to a ROIC to WACC ratio of -2.92. This suggests that VS is even less efficient in generating returns from its investments compared to MSGM. Similarly, Cosmos Health Inc. (COSM) has a ROIC of -33.52% and a WACC of 17.85%, with a ROIC to WACC ratio of -1.88, which is slightly better than MSGM but still negative.

Magic Empire Global Limited (MEGL) stands out with the highest ROIC to WACC ratio among the peers at -0.48, despite having a negative ROIC of -7.64% and a WACC of 15.98%. This indicates that MEGL is closer to covering its cost of capital compared to the other companies in this peer group. Mobile Global Esports Inc. (MGAM) has the most concerning figures with a ROIC of -351.37% and a WACC of 4.64%, resulting in a ROIC to WACC ratio of -75.66, highlighting significant inefficiencies in capital utilization.

Motorsport Games Inc. (NASDAQ:MSGM) is a company that specializes in developing and publishing racing video games. It is part of the broader gaming industry, which includes competitors like Genius Group Limited, Versus Systems Inc., Cosmos Health Inc., Magic Empire Global Limited, and Mobile Global Esports Inc. These companies are evaluated based on their ability to generate returns relative to their cost of capital.

Motorsport Games Inc. has a Return on Invested Capital (ROIC) of -28.03% and a Weighted Average Cost of Capital (WACC) of 13.67%. This results in a ROIC to WACC ratio of -2.05, indicating that MSGM is not efficiently generating returns to cover its cost of capital. This inefficiency is a concern for investors looking for profitable ventures.

Versus Systems Inc. shows a ROIC of -47.17% against a WACC of 16.08%, leading to a ROIC to WACC ratio of -2.93. This indicates a significant inefficiency in generating returns, as its ROIC is much lower than its WACC. This is a common challenge among these companies, as they all have negative ROIC to WACC ratios.

Magic Empire Global Limited stands out with the highest ROIC to WACC ratio of -0.48, despite a ROIC of -7.64% and a WACC of 15.94%. This suggests it is the least inefficient among its peers in terms of capital utilization. However, all companies in this group face challenges in achieving profitability and efficient capital utilization.

Motorsport Games Inc. (NASDAQ:MSGM) is a company that specializes in developing and publishing racing video games. It is known for its popular titles that cater to motorsport enthusiasts. The company competes with other gaming giants in the industry, striving to capture a significant share of the racing game market.

On March 20, 2025, MSGM reported its earnings, revealing an earnings per share (EPS) of -$0.89, which was below the estimated EPS of -$0.48. The company's actual revenue was approximately $1.97 million, falling short of the estimated $3.3 million. This earnings report was discussed during their Fourth Quarter and Full Year 2024 Earnings Conference Call, where key company figures, including CEO Stephen Hood, addressed the financial performance and strategic direction.

Despite the disappointing earnings, MSGM experienced a revitalizing year with improved revenues and reduced cash burn. A significant highlight was the release of their new title, Le Mans Ultimate, in Early Access. Updates to the game in December 2024 and February 2025 significantly boosted player numbers and consumer sentiment, as highlighted by CEO Stephen Hood. These updates introduced the popular LMGT3 category of cars, featuring renowned manufacturers such as Ferrari, McLaren, and Porsche.

Financially, MSGM has a price-to-earnings (P/E) ratio of approximately 0.83, indicating a relatively low valuation compared to its earnings. The company's price-to-sales ratio stands at about 0.56, suggesting modest market valuation of its sales. However, the enterprise value to operating cash flow ratio is negative at -1.15, which may indicate challenges in generating cash flow from operations.

MSGM's debt-to-equity ratio is 0.014, indicating minimal reliance on debt financing. However, the current ratio is approximately 0.49, which may suggest potential liquidity concerns in meeting short-term obligations. Despite these challenges, the earnings yield is around 1.21%, providing insight into the return on investment for shareholders.