A revenue warning from eSports events business Gfinity (GFIN:AIM) looks to be the final nail in the coffin for the £10 million cap, whose shares crash 10.4% to 10.8p as its operating loss widens.

The group, which hosts video gaming competitions, says full year revenue is likely to be below market expectations because it’s ‘difficult to quantify’ the timing of potential sponsorship agreements and the amount of revenues they will generate.

It’s looking increasingly unlikely that Gfinity will sign a major sponsorship agreement this financial year. Deals are critical to its success as it only gets a small amount of revenue from tickets, merchandising and online users.

GFINITY - Comparison Line Chart (Rebased to first)

So far the group has only signed one major contract – with The Sun newspaper. That deal was signed almost a year ago and it only lasts for two years.

Gfinity says it’s having very encouraging discussions with potential major partners, but it’s been saying this since we met the company back in March 2015. It claims there will be a ‘step change’ in revenue from the second half onwards, but we’ll need it to sign several major deals before we believe this statement.

Despite tripling its revenue in the six months to 31 December, operating loss widened from £1.3 million to £1.8 million. It spent a whopping £1.55 million on staging events, developing its website and marketing. A swing to profit is likely to be a long way off.

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Issue Date: 22 Mar 2016