Gravity Valuation Update

Jan.25.10 | About: GRAVITY Co., (GRVY)

I was reviewing the previous stock valuation of GRVY again and I noticed I made many errors in the balance sheet numbers by not double checking. This is the second time this year I’ve made a silly mistake like this.

This is especially the case when dealing with ADRs because the currency conversions may not be accurate, so it’s vital to double check. Even more so if it’s a small cap. Definitely not a good start and I’m not pleased with my carelessness at all.

But here’s an updated version of the balance sheet to calculate NNWC.

As you can see, the initial $1.71 NNWC value from the original post was off. The correct number is $1.36 so the current price is a little higher than the NNWC.

Now I clearly made a mistake in my calculation but I’m not selling. I still believe the upside has much greater potential compared to the downside risk. The company is generating tiny profits from its business, but what I like most is that revenue from royalties is increasing. If Ragnarok Online 2 is launched in the first half of 2010 as stated in the annual report, then the catalyst to unlock the value is just around the corner.

Also refer to the new company snapshot I created to help with the analysis.
GRVY Stock Snapshot

Disclosure: I own GRVY at the time of writing.