PowerUp Acquisition Carries Video Game and Metaverse Goals (NASDAQ:PWUP)

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PowerUp Acquisition Corp. (Nasdaq: PWUP) raised $287.5 million in an initial public offering at $10.00 per share, according to the terms of its recent S-1/A regulatory filing.

SPAC (Special Purpose Acquisition Corporation) intends Pursuing merger with a company in the interactive media, digital media, sports, entertainment and/or entertainment sectors, with a particular focus on video games, neighborhood games and new metaverse video game companies.

I prefer a very “robust” approach to SPAC investing and am looking for strong management teams and at least one successful SPAC transaction under their belt.

Therefore, I am waiting for SPAC Acquisition PowerUp in the near future.

PowerUp has CEOs leading its sponsor, PowerUp Sponsor LLC.

Shepherd leads:

CEO, Bruce Hack, formerly Chairman of the Board of Directors of Technicolor SA and Lead Creation Representative for Activision Blizzard and then Vice President.

– Chairman and CEO, Jack Triton, who was the president and CEO of Sony Computer Entertainment.

SPAC is the premiere car of this executive group.

PowerUp . Market

According to the 2020 Market Research Report by Grand View Research, the global video game market was valued at $151 billion in 2019 and is expected to reach $398 billion by 2027.

This represents a projected compound annual growth rate of 12.9% from 2020 to 2027.

The main drivers of this projected growth are the increased penetration of online services, growing consumer demand for more interactive entertainment, and greater technological innovations in the industry.

Also below is a chart of the historical and forecast market trajectory of the US video game market to 2027:

Video game market in the United States

US video game market (Grand View Research)

SPAC IPO Terms for PowerUp

New York-based PowerUp sold 28.75 million units of Class A stock and warrants at $10.00 per unit for total revenue of approximately $287.5 million, not counting the sale of its usual underwriting options.

SPAC has 15 months to complete the consolidation (initial business combination). If he fails to do so, the shareholders may redeem their shares/units for the remaining IPO proceeds held in trust.

Stock symbols include:

  • Units (PWUPU)

  • Commands (PWUPW)

  • common stock (PWUP)

The founder’s shares represent 20% of the total shares and consist of Class B shares.

Sponsor SPAC has also purchased 9.76 million warranties at $1.50 per Special Mode. Each order will authorize the Limited Partner to purchase Class A Ordinary Shares at $11.50 per share.

SPAC’s terms of conducting an initial business combination include the requirement to purchase one or more companies equal to 80% of SPAC’s net assets and a majority vote for the proposed business combination.

SPAC may issue additional shares/units to implement the proposed merger. If so, Class B shares will then be increased to retain 20% of the sponsor’s share.

SPAC is interesting as it is looking to merge with a target company in the broader video game industry.

The company’s management has solid operational experience in the industry and extensive experience in video games and media.

However, the team has no previous experience as a plumber, so it does not have a successful track record as a plumber.

An investment in SPAC prior to the announcement of the proposed business combination is primarily an investment in SPAC’s senior management, its ability to create value and the past track record of SPAC shareholders.

Thus, an investment in a SPAC company can be likened to an investment in a venture capital company as a limited partner.

The cost of this investment is about the same, 20% upside for a SPAC sponsor, but the time frame for significant gains can be much faster, a period of 1-3 years for SPAC for 10 or more. years for a typical venture capital fund.

The video game market is expected to grow at a significant growth rate over the next few years, although the marketing side of the business will undergo significant adjustment due to the change in advertising policies of major horizontal platforms such as Apple (AAPL) and Google (GOOG) (Google).

These changes, which include neglecting the use of individual ad identifiers, have negatively impacted game developers’ ability to target potential users, potentially increasing the cost of acquisition for players.

While management’s track record is impressive and the investment in SPAC may be justified based on this aspect alone, their lack of prior experience with SPAC is a major downside to this opportunity.

With so many SPAC companies chasing a limited number of high-quality targets, SPAC has underperformed the IPO market in recent years.

I prefer a very “eclectic” approach and look for strong management teams and at least one successful SPAC transaction.

Therefore, I am waiting for SPAC Acquisition PowerUp in the near future.

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