Today it’s time for a look at another overheated James Altucher pitch, this time for Altucher’s Top 1% Advisory ($2,000, no refunds)
The big idea this time is that he’s teasing a “social media killer” and, of course, “one little company” that he thinks will be the big winner of this “killer” trend.
What is it? Here’s a little taste of the ad:
“… the demand for this ‘Social Media Killer’ is INSATIABLE…
“Millions of people are flocking into it…
“Investopedia wrote that there is ‘no question this is changing the landscape…’ and has created ‘an opportunity for investors to cash in.’
“And there is ONE company that has positioned itself exclusively to collect the lion’s share of all these profits.”
I’ll let the cat out of the bag a bit here — this “social media killer” is eSports and online gaming and game streaming in general, and the phenomenon that is the battle royale game Fortnite in particular. The trend is of people playing more video games live and socially online, and of people also watching other gamers play games either online or in big live arena tournaments and professional eSports video game leagues.
This is not a new idea, of course, it’s been teased by a few folks over the past year or two and I’ve been watching some of the big eSports and gaming companies and considering some purchases (haven’t bought anything yet), but it’s somewhat difficult to find a “clean” investment in this trend. The biggest obvious candidates, the major video game publishers who are driving a lot of the eSports leagues and publishing most of the games, are also suffering because they have all lost mindshare and market share to Fortnite in the past couple quarters, so their share prices have collapsed and scared everyone off… and you can’t really invest in Fortnite directly, since it’s owned by a private company (Epic Games), and the publicly traded companies who are part-owners of Epic, notably the Chinese tech giant Tencent, are so huge that Fortnite doesn’t really register on their income statement.
I’m guessing that a position in Activision Blizzard or Electronic Arts at prices near where they stand now will probably end up being profitable (I went into those in some detail when the Fool had a similar video gaming tease two weeks ago), since the trend of increased video gaming will be with us for a lot longer than Fortnite is likely to be able to keep its perch atop the business, but the past few months make it a little scary… and Altucher clearly isn’t pitching these huge companies, so what is it that he’s got in mind?
Here’s a little more from the ad:
“Forbes wrote that this opportunity is “something that’s continuing to grow, and at a rapid pace.”
“They know there is still tons of room to grow.
“And now with Amazon, Disney and ESPN getting behind it…
“You can expect to start seeing this underground opportunity on every webpage Amazon touches…
“You’ll see it across every network Disney owns, including the popular online-streaming service Hulu…
“And I predict it’s all going to kick off with a massive announcement from ESPN as soon as this coming Thursday.
“I suspect over 200 million people could watch it on TV…
“That’s when the mainstream bump will take effect…
“And one tiny company’s stock will absolutely soar.”
I don’t know whether ESPN will really make a new eSports announcement of some kind today… they haven’t yet, but they are certainly involved in eSports and making some big bets on the trend. That’s not brand new, they did a big deal with Activision Blizzard to broadcast the finals of the Overwatch league last year, and it’s not rising to the level of major “real” sports just yet but it is clearly getting the attention of most of the big sports leagues and major media companies. The breakthrough game streamer Ninja even got the cover of ESPN Magazine last fall. No one knows quite what the finances of esports will look like, or of how gaming will evolve, but it’s clearly a trend in society… and that always drives investor interest.
But that doesn’t tell us what the “tiny company” is … more clues?
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“WARNING: As Soon as ESPN Makes Their Big Announcement, ALL Main Street Investors Will Be Wise to This Tiny Company…
“Once the cat is out of the bag… it cannot be put back in.
“Which is why it’s so important you get in before next Thursday.”
That’s almost certainly just some “false urgency” designed to get you to make a subscription decision quickly — after all, the enemy of any big-ticket no-refunds newsletter ad campaign is “hold on and let me think about this for a minute.”
We also get some more specific clues, especially about the connection between eSports and actual professional sports leagues:
“The NFL says it is ‘the only North American sports league to commit all its franchises to competitive gaming…’ and has ‘the largest individual tournament prize pool, $700,000, in Madden’s 30-year history.’
“To participate, real investors had to put BIG money into esports…
“Robert Kraft, owner of the New England Patriots — one of the most successful sports franchises in the world — just paid $20 MILLION for an esports team!
“So did Stan Kroenke, owner of the Los Angeles Rams!
“With each NFL team putting up $20 million, you’re looking at almost a billion dollars invested into esports.
“And one tiny company has locked in an exclusive partnership with the creators of the Madden video game…
“So this little-known company is the ONLY company allowed in on the profits in this specific sector…”
The NBA is in a similar position with their NBA 2K game (NBA2K is published by Take Two Interactive (TTWO), by the way… Madden NFL by Electronic Arts (EA)). And apparently this “tiny company is also involved there:
“But the one tiny company I’ve been talking about was even smarter…
“They recently revealed a deal for exclusive rights to the profits in their sector, in the NBA’s new league!”
So what is it that this “tiny company” does? What’s that “sector” of the market that Altucher keeps referencing? More clues…
“And thanks to the patented technology developed by this one tiny company…
“Fans can interact and engage with their favorite pro gamers at a level never possible in any other sport ever before!
“This is a total breakthrough…
“One of my favorite things to invest into is a company with patents.
“Warren Buffett likes “moats” around his investments. And patents are the ultimate moat!
“This tiny company’s patented technology has helped build a new social media alternative that the masses are FLOCKING to….
“… this tiny company has over 175 issued and pending patents on their ideas…”
And apparently their patented product gives players some kind of advantage:
“This Tiny Company Has Unlocked the Secret Stash of Gaming Profits
“You see, this company makes a key piece of technology that is critical to succeeding in the world of competitive gaming.
“Currently, the largest video game prize pool in the world is for the massively popular game Fortnite.
“In case you haven’t heard of it…
“Over 200 million people play Fortnite, making the player community larger than the population of Russia and Japan!
“And the top players in the world will compete for a prize pool of $100 MILLION!
“With stakes that high, professional gamers will want every advantage possible.
“And this little-known company makes key technology that offers the sharpest advantage available in gaming.
“Using this company’s tech, players can react faster AND with greater precision than their opponents…”
And we get a hint about the leadership of the company:
“… this tiny company’s board is LOADED with talent from the largest tech compa