Date : October 21, 2019
New Opportunity: Versus Systems Inc. (OTCMKTS:VRSSF)
- Big Market Opportunity: Disrupting the $300B Digital Ad market and the $100B Gaming market
- Big IP Value: Was awarded U.S. Patent 10,242,538, titled “Systems and Methods for Creating and Maintaining Real Money Tournaments for Video Games.”
- Big Catalysts: Recently signed Strategic Partnership with tech giant HP, Inc. (NYSE:HPQ)
- Big Growth: Just posted 99% Sequential Q/Q Sales Growth
- Big Squeeze Potential: Naked shorting accounts for >50% of all volume for most of past month according to FINRA
Gaming itself is a big deal. We’re talking about a $100 billion market, with an active audience of 2.6 billion people who have spent over 3 billion hours playing.
Advertising is an even bigger deal, with the total digital ad marketplace set to rack up over $300 billion in sales in 2019 alone.
Versus Systems sits as a disruptive innovator right at the intersection of these two monstrous market trends. The company has a patented process to insert real-world rewards and prizes for in-game challenges that can be integrated into popular video games, presenting advertising with a far more engaging channel to reach consumers.
To give you some idea of the legitimacy and promise of this powerful innovation, the company recently inked a game-changing strategic partnership with HP, Inc (NYSE:HPQ), the technology giant known for its powerful gaming systems.
Shares of VRSSF stock have been climbing and continue to display a bullish posture on the chart. And recent data shows that naked short interest has been growing in recent weeks (see below), suggesting that a major breakout above key resistance in the $0.35/share area could spark a massive short squeeze with no obvious resistance in sight.
The company is also now seeing enormous sales growth, with sequential q/q growth of nearly 100% — which is more than impressive and suggests Versus is seeing its core vision really catch on in its target market.
We also see a number of powerful catalysts ahead that could spark the stock’s next breakout higher.
Who is VRSSF
Versus Systems Inc. (OTCMKTS:VRSSF) is a leading provider of “gamified” ad opportunities for brands seeking fresh avenues to market and advertise products and services.
Gamification can effectively be boiled down to “if you do this, then you get that.” Versus has a strategy that is predicated on a simple set of insights: advertisers NEED an audience, people HATE ads, and people LOVE winning.
Ergo, if you can provide a means for marketing to happen in the context of gamified outcomes, you create massive value for marketing and advertising clients.
Another way to look at the situation is through the lens of engagement. When an ad appears on a website you are looking at, and you have an option to “X” it away, you will do so – everyone does – almost instantly. Ads have had to be designed to be shorter and shorter in duration to get a complete message across before the viewer pushes it away. Even 15 seconds is way too long.
Contrast that with game playing where real-world prizes are involved. The data here are just the opposite. The company’s CEO talks about a guy who recently played a game for 23 straight hours just to win a hat.
The Versus model is a classic ad model built on cost per engagement. If you are the advertiser, and you offer up some prize that is part of a marketing campaign (let’s say you sell surfboards and give away a T-shirt as part of a surfing segment of a video game if players can manage to pull off a particular trick on a particular wave), then, every time someone engages with that gaming challenge in order to win your T-shirt, you pay a fee that Versus splits with the producer of the video game.
Any part of basically any game can become the landscape on which a gaming challenge plays out toward the benefit of an advertiser. The vehicle to implement this is the company’s Winfinite platform – a proprietary in-game prizing and promotions engine that allows game publishers and developers to offer in-game prizing across various platforms including mobile, console, PC games, and streaming media. Brands pay to place products in-game via WINFINITE, and gamers compete for those prizes.
It’s just that simple.
The catalysts have mounted to present us with what appears to be a remarkable opportunity. The key elements are IP, a major strategic partnership, strong global expansion, and a growing list of brand and gaming partners.
IP and HP. The IP element is an awarded US Patent that covers the company’s Winfinite platform. This gives the company and its shareholders protection over the market they are cultivating. Specifically, in March, the company announced that, pursuant to a Versus filing made in 2015, the U.S. Patent and Trademark Office (USPTO) has issued U.S. Patent No. 10,242,538, titled “Systems and Methods for Creating and Maintaining Real Money Tournaments for Video Games.”
According to that release, “the issued patent protects a number of proprietary systems and methods for awarding real money, physical goods, digital currencies, and downloadable content to players inside video games and other interactive media. Versus uses these patented technologies within their Winfinite prizing platform, allowing players to play for real-world prizes inside their favorite games.”
That IP event leads naturally to the huge strategic partnership agreement executed with HP, Inc (NYSE:HPQ) because HP did not have the legal right to develop a similar solution on their own. The company announced the partnership in August, stating that it had executed an agreement with HP to license its WINFINITE technology for use in HP products and services. The agreement provides for the non-exclusive use of Versus’ technology and prizing software by HP and for access to the WINFINITE platform.
Matthew Pierce, CEO of Versus Systems noted at the time: “Reaching this agreement is an important step for our Company. HP is our largest corporate partner to date and shows we have the ability to work with major, multinational firms at the cutting edge of technology. HP has the potential to become a major partner of ours. We look forward to future implementations of WINFINITE technology and to reaching future user milestones.”
That partnership has led to the announcement that Versus technology is now powering HP’s OMEN Rewards system, a real-world prizing platform built into OMEN Command Center and available for download by any Win10 PC via the Windows Store. OMEN Rewards will allow everyone running the OMEN Command Center app to play their favorite games for real-world prizes, gift cards, trips and experiences. The OMEN Rewards Beta is now available in the United States with plans to expand to other regions in the future.
Expansion. In September, the company announced that its top executives were in Hong Kong to meet with potential content and advertising partners focused on Chinese and other Asian markets. As a result of successful meetings, Versus is planning to deploy their patented Winfinte platform alongside a number of partners in the region, bringing real-world prizes to hundreds of millions of potential customers.
According to the release, Asia-Pacific is both the largest, and the fastest growing, gaming market in the world according to Statista, with more than double the annual revenues of the next largest region (North America, $33B). China alone accounts for hundreds of millions of players driving tens of billions of dollars in in-game and in-app purchases annually.
Just after that, the company announced that it has formed Versus Systems UK Limited as a UK entity in advance of a planned December launch of their proprietary Winfinite rewards platform in the United Kingdom. The UK has a $5.7 billion (USD) annual market in games that is, according to the BBC, now worth more than the movie and music markets combined in the UK. Versus Systems plans to offer the Winfinite rewards platform inside of select games and gaming systems by the end of 2019.
New Brands and Games. This is the bread and butter for the longer-term bull case. The company is picking up new partners quickly, leading to the strong sales growth we discussed above.
One key announcement in this vein was the company’s announcement a few days ago that OMEN Rewards, powered by Versus proprietary Winfinite engine, is now offering rewards for in-game achievements in League of Legends by Riot Games. Prizes are now available for eligible players across the United States.
According to the release, League of Legends by Riot Games is the biggest PC game in the world, with 8 million peak concurrent players daily, and hundreds of millions of players across the globe. League is currently celebrating their 10th year as one of the most successful, and most-played PC games ever made. League is also one of the most successful e-sports titles ever, with over 200 million people watching the 2018 League of Legends World Championships.
Just before that, the company announced that it has entered into a mutual investment agreement with Animoca Brands Corporation Limited (ASX:AB1), which develops and publishes a broad portfolio of mobile products including games such as The Sandbox, Crazy Kings, and Crazy Defense Heroes as well as products based on popular intellectual properties such as Formula 1, Garfield, Snoopy, Thomas & Friends, Ever After High, and Doraemon. Animoca Brands leverages gamification, blockchain, and artificial intelligence technologies to enhance their games and content.
The company is also now moving into the Augmented Reality space with its new arrangement with Ludare Games Group, through which the Winfinite prizing platform will be included in an October 2019 release from Ludare. The game takes advantage of a location-based augmented reality engine to provide players on iOS and Android devices with experiences based on their personal surroundings when they play.
According to the release, Ludare Games Group, a Canadian gaming company, develops both original games and licensed games based on global film franchises and internationally recognized IP. The game pairs the latest location-based AR technology with the Winfinite rewards engine from Versus to provide players with opportunities to win prizes based on where they are currently playing. Prizing will be available in-game via the proprietary Winfinite engine throughout available regions in the US and Canada.
Social Media Expansion. The company most recently announced the launch of a real-time social media sweepstakes campaign system called #VersusXP, which allows brands to launch sweepstakes and prizing events in hours, rather than months, to leverage time-sensitive events on social media.
According to the release, #VersusXP allows any company offering games or other media powered by Versus Systems to create prized campaigns as a real-time response to organic, #hashtag trends and cultural moments. It’s first successful campaign was launched following the #FortniteBlackout on Sunday, October 13, 2019 that lasted two days.
“We did not work directly with Epic or Fortnite, but in response to the event, launched a challenge on social media that encouraged those playing the game to launch the game via a platform powered by Versus such as HP’s OMEN Command Center,” said Christian Miranda, Head of Accounts and Product Integration at Versus. “Once the player watched the black hole for a specific period of time, the players were entered into a sweepstakes.”
The contest was shared widely online and tweeted by brands such as HP.
It is estimated that approximately 60% of the game’s player base joined the challenge, and Versus continuously updated the contest to increase engagement, beginning with a “minutes watched” challenge. Versus later updated it to incorporate the act of opening the game as well. This type of game activity has never been done before.
First off, VRSSF shares are in a clear bullish trend, trading well above all major moving averages on steadily rising volume over the past 3 months. From any perspective, the technical picture is bullish and strong. It is also well-consolidated, with RSI under 50, suggesting a stock that could move significantly higher before running into any oscillator red flags (ie, overboughtness).
As we noted above, shares are also heavily shorted, as shown in the blue chart below. The majority of all trading volume over the past month has been by shorts trying to profit from a move lower after the stock’s breakout to the upside in August.
That opens up the potential that a move above recent range resistance could spark a massive wave of short covering and squeezing price action as those very same shorts run for the hills.
VRSSF (Versus Systems Inc.) operates a business-to-business software platform that allows video game publishers and developers to offer prize-based matches of their games to their players. Its Winfinite platform is an in-game prizing and promotions engine that allows video game publishers and developers to offer in-game prizing to their players through mobile, console, PC games, and streaming media.
The company has operations in Canada, the United States, the UK, and the Asia-Pacific region.
Versus Systems has developed WINFINITE – a proprietary in-game prizing and promotions engine that allows game publishers and developers to offer in-game prizing across various platforms including mobile, console, PC games, and streaming media. Brands pay to place products in-game via WINFINITE, and gamers compete for those prizes.
- VRSSF just started booking serious revenues, pulling in $330K in quarter-ended June 30, 2019
- VRSSF just recorded sequential q/q topline growth of over 98%, demonstrating massive sales growth potential in the quarters ahead
- VRSSF recently signed a major strategic partnership with tech giant HP, Inc (NYSE:HPQ)
- VRSSF is racking up new branding and gaming partners, and rapidly expanding into the booming Asia-Pacific market
- VRSSF shares are heavily shorted, with naked shorting accounting for more than 50% of all trading volume for the majority of days over the past month, suggesting a short squeeze could be near at hand as the stock rises
- VRSSF is in an uptrend, trading above major MA’s, but consolidated nicely, with RSI under 50
- VRSSF just recorded a MACD Bullish reversal, suggesting a technical change in trend
- VRSSF was awarded a full patent from the USPTO for its core technology
Versus Systems Inc. (OTCMKTS:VRSSF) shares are situated for upside based on a string of very powerful catalysts, clear execution with strong sales growth, a ripe crop of over-zealous shorts sitting in vulnerable positions in a bullish chart pattern, strong partnership growth including a major agreement with HP, clear IP protection, and a major global expansion in operations now solidly underway.
On almost every level, the stock looks like a bargain with big things ahead. Are there risks involved? Sure. This is a young company without a huge stash of cash. But it did show a 217% jump in cash and cash equivalents on the balance sheet last quarter, and has plenty to deal with near-term hurdles. But the bigger point is this: the business is heading rapidly in the right direction with big things ahead in a massive market opportunity.
Given its core growth in cash, sales, and partnerships in the past 3 months, a very good case can be made that all those shorts are seriously at risk of being stretched out in the sun at much higher prices.