Is GAN a buy given sports betting boom?
It’s time to talk about a sports betting name. Here is the breakdown on $GAN, otherwise known as GAN.
Current Price: $21.83
52/Wk High: $28.95
52/Wk Low: $2.60
Market Cap: $799.5 Million
Read below for the breakdown!
GAN is a provider of software service solutions for online casino gaming and sports betting operations. Given the sports betting growth just in 2020 alone, GAN could have a bright future.
GAN operates in two core segments which are Real Money iGaming operations and Simulated iGaming Operations. Throughout the past few months, GAN stock has been on fire, rising 112% in the last year.
Shifting into earnings GAN missed Q3 expectations with an EPS of $-0.14, much less than the expected EPS consensus of $0.02. While EPS did miss significantly, GAN saw plenty of growth under the hood.
GAN reported revenues of $10.3 million, representing 86% growth year over year. Not only that, but GAN also reported real money internet gaming revenues of $7.7 million, a big improvement over the 2019 level of $4.1 million.
As for simulated gaming revenue, revenues within the segment totaled $2.6 million, up significantly from the same time 2019 levels of $1.4 million.
GAN went on to report a gross profit of $6.4 million, a big improvement over the same time 2019 gross profit level of $2.4 million. Management also reported a net loss of $4.1 million, worse than the net loss in Q3 of 2019, which was $1.8 million.
On the bright side, gross operator revenues totaled $142.3 million, representing an increase of 76% year over year.
Digging further into the numbers, Average Revenue per Daily Active User increased 27% year over year while Active Player Days increased by 38%.
Rounding out Q3, GAN is in the midst of a major acquisition of Vincent Group, a similar company with mass exposure to Northern Europe, Latin America, and Canada.
Management was upbeat about the quarter.
“Our business remains strongly positioned to leverage the momentum of online sports betting and iGaming, which is clearly accelerating across the globe.” CEO Dermot Smurfit said.
Shifting into the balance sheet the numbers aren’t bad.
Total Debt: $654 Thousand
Total Liabilities: $15.573 Million
Total Assets: $78.019 Million
Cash & Short Term Inv: $57.489 Million
When it comes to valuations, GAN stock is pricy at a price to book ratio of 9.23x, but overall on a long-term basis, GAN’s valuation isn’t terribly high.
Given the numbers and the rise of sports betting the analysts are bullish with a mean price target of $28.50/share, representing a 26.92% gain from current prices.
It is also important to note that the high price target is $30.00/share, representing a 33.60% gain, while the low price target is $27.00/share, representing a 20.24% upside.
The big money is also quite involved with 40.49% of GAN being owned by institutions. Top holders include Columbia Threadneedle Investments, JB Capital Partners, and David Capital Partners.
On a technical basis, GAN could be flashing opportunity. According to the six-month charts, the MACD is moving upward with significant momentum within a range of 0.78 up to 1.22.
The six-month charts are also indicating an RSI of 75.38 and CCI of 156.30, both of which are on the high end.
Overall the online sports betting space is set to boom and GAN seems to not only be expanding due to market growth but through acquisitions as well. Therefore GAN looks to be a solid long-term pick to cash in on sports betting.
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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.