EVR Holdings (LON:EVRH) rose 6% on Friday and a further 12% today. The stock is up over 100% year on year and the company is now valued at roughly £200 million. The valuation has reached these heights, although the company has not achieved any official sales yet for its MelodyVR product. Is this valuation justified?
EVR Holdings is a virtual reality company that’s focused on virtual reality content creation. It’s main subsidiary and product is called MelodyVR (http://melodyvr.com/). The company was admitted to AIM just 2 years ago in May 2016 with a share price of 1.1p and now has a share price of 18p.
Background to Virtual reality
Virtual reality has been around for quite some time and although though there are VR headsets that retail for as cheap as £50 (several low quality no-name brands), some headsets can retail for as much as £399 (the Oculus Rift). The quality of the VR experience for each headset can be very different and generally, the more money you’re willing to spend, the better the experience.
Playstation VR was launched for the gaming mass market in October 2016 but even this headset currently retails a price tag of over £250. The VR experience is not as great as the top end Oculus Rift, but the headset provides an acceptable experience and has decent reviews from users.
However, within the next few weeks, Facebook hopes to revolutionise the VR market. The product it hopes to do this with is the Oculus GO headset. The Oculus GO headset is a much cheaper version (at $199/£199) of the Oculus RIFT, but the expectation is that the quality of the headset will be close to the quality of the original Oculus RIFT device. Facebook is expected to launch the headset at it’s F8 conference May 1-2 (that’s starting tomorrow!) and is also expected to announce the official launch date during its conference. Potentially, the headset is what could take VR mass-market, to millions & even billions of consumers.
MelodyVR – The product
The idea behind EVR Holding’s MelodyVR is to provide a platform where VR users can watch live performances in VR. The performance can be previewed before purchase, and users can switch to different angles/viewpoints during the performance. The concept is simple, but the potential revenues are staggering if VR does indeed become mass market. Imagine potential revenue streams for a single show for a popular artist, if fans can watch the artist in VR live at their performance without even being there. For instance, a single performance of Rihanna in Germany could be watched by Rihanna fans all over the world, from her hometown in Barbados to her fans in China. If MelodyVR can get this right, and monetise the technology correctly, there is no reason why the technology needs to stop at live performances. The VR technology could be used at anything else that’s live, from conferences, to talk shows, to lectures in a university, the possibilities may be endless.
Music labels are signing on
Last Friday, the company released a statement confirmed that it had signed agreements with 6 leading music record labels, including labels that manage headliners such as Gwen Stefani, Lionel Richie and Marilyn Manson. In addition to this, in Feb 2018, the company signed a multi year agreement with Warner/Chappell music which covers top artists such as Beyoncé and Rihanna. In order to sign these agreements, I’m sure that EVR Holdings would have had to display some sort of demo of the MelodyVR product, and it’s clear that the music labels felt that the product was something that they needed to be involved in.
Imminent launch of Melody VR
The company also released an RNS earlier this month indicating its intention to launch on the Oculus GO and its expectation that its launch date will be in the coming weeks.
UPDATE
The company has just announced a few hours ago that it will be placing £20m in shares at 16p a share with institutional investors to fund global expansion once the MelodyVR product officially launches. With the current market cap, this will cause dilution of 10%. However, the company also mentions in the release:
“The Company wishes to explore additional immersive technologies and sectors such as interactive advertising and augmented reality, in order to generate additional revenue streams.”
“Following the launch of the MelodyVR product in the US and UK, the Company will seek to accelerate expansion and subsequent product launches throughout numerous global territories, including but not limited to, Latin America, South Korea, China, Taiwan, Japan, Australia and New Zealand.”
Summary
MelodyVR looks like a very promising platform. With the imminent launch of the Oculus GO, MelodyVR looks to be perfectly positioned to capitalize on the potential mass market distribution of Facebook’s new device. Record labels are signing on in their droves, and this appears to confirm that the product must be something that deserves attention. The placing announced today may result in a retreat from the 18p high reached today, but with the F8 conference scheduled for the next 2 days and the upcoming release of the product, this retreat may very well be temporary.
As always though, please do your own research before buying/selling this share; the opinions above are only my personal views and should not be considered as advice.
