Our model suggests that REVV Racing could generate around $ 40m in first year revenues. We believe that the biggest source of revenue will be from asset sales, such as upgrades to cars and track sales. We assume that these asset sales generate around $ 2−3m per month, which equates to around $ 30/user/month.
In order to drive user activity and create a self-sustaining economy, the play-to-earn model will ensure a stream of weekly tournaments with a prize pool. We assume that around 20% of sales will be paid back to the users as rewards for competing in the major tournaments.
There are a lot of levers that the game developers can pull to drive further monetisation of the game, which could be an upside surprise to our base case:
- Sponsorship deals with auto related companies
- In-game advertising given abundant real estate on trackside and cars
- Increase user base with asset rentals
- Develop an in-game burnable currency.
Overall, we believe that REVV Racing alone could earn around $ 31 million in profits, implying a P/E of 1.5x for the circulating supply of $REVV. This valuation gives zero valuation to all the other REVV Motorsport titles that are currently operational or future releases. A fully diluted implied valuation for REVV (again ignoring all other titles) is around 21x PE.