Enterprise online casino gaming software platform
GAN Limited (NASDAQ:GAN) stock has been underperforming the benchmark
S&P 500 index (NYSEARCA: SPY). This provider of online gambling software for casinos and gaming operations has been largely overlooked by the
sports betting and
iGaming momentum. The company provides its turnkey gaming platform to casinos that seek to tap the online gambling wave with simulated and real money games. GAN went public around the peak of the pandemic in May 2020 as shares rocketed to $28.95 highs before commencing its meltdown back into the teens. Risk tolerant investors looking for an entry into the online gaming trend can consider monitoring opportunistic pullback entry levels as this software-as-a-service (SAAS) play.
Q2 FY 2020 Earnings Release
On Aug. 20, 2020, GAN released its fiscal second-quarter 2020 results for the quarter ending June 2020. The Company reported an earnings-per-share (EPS) loss of (-$0.33) excluding non-recurring items versus consensus analyst estimates for a loss of (-$0.01), missing estimates by (-$0.32). Revenues rose 99.5% year-over-year (YoY) to $8.32 million beating analyst estimates of $0.01 million. The real money Internet gaming (RMiG) revenues grew 110% to $5.7 million. The U.S. accounted for 85% of total revenues, from 75% YoY. Active player-days and average revenue per daily user grew 18% and 100% respectively from prior quarter. Initial public offering (IPO) expenses were $8.8 million compared to a loss of (-$1.9 million) YoY. The cash balance grew to $63.8 million at the end of Q2 compared to $10.1 million YoY, largely due to proceeds from its U.S. IPO.
Conference Call Takeaways
CEO of GAN, Dermott Smurfit, reiterated full-year 2020 revenue guidance in the range of $37 million to $39 million. Real money gambling revenues grew 70% YoY based on the “phenomenal” growth in the U.S. The Company expects to announce and launch their newest Tier 1 multi state operator clients in the “very near term”. GAN is the exclusive technology partner for many U.S. land-based casinos and gaming organizations including Parx Casino, FanDuel, Ocean Casino Resort, the Cordish Group and Penn Gaming. Fan Duel will be using their own system from Q4 forward but will remain the exclusive partner for their simulated casino gaming.
Penn National Gaming
GAN licensed its Simulated Gaming platform to Penn National Gaming (NASDAQ: PENN) for its online social simulated casino, the day before its Q2 release. The simulated casino is integrated with Penn National’s Mychoice rewards program to drive more traffic. The iGaming trend flourished while most land-based U.S. casinos were closed. Pennsylvania online casino gross gaming revenues for casino client Parx Casino reached $19.3 million in Q2 with all-time monthly high revenues hitting $7.6 million in May. The company was able to accelerate online iGaming for client Cordish Gaming Group’s “Play Live” internet gambling business in the state in 72 days after contract signing.
U.S. iGaming Driving Growth
Smurfit expects Michigan to approve iGaming and GAN has preparing to launch three casino operator clients in early Q4. iGaming will drive growth and it’s still in the early stages in the U.S. The Company plans to acquire additional sports gaming technologies as they is highly synergistic to their casino gaming. Smurfit stated, “Our continuing mission is to bring retail casinos online with our technology platform, focused principally on delivering all forms of Internet gambling content, including casino gaming and sports betting.”
GAN Added to Russell Indexes
On June 29, 2020, Gan was added to the Russell 2000, Russell 3000 and Russell Midcap indexes. The inclusion brought in more liquidity for shares. It also marked a sell-the-news reaction as shares rose leading up to the effective trading date. The Company generates revenues from real money and simulated money being driven by the growth of iGaming as states look to generate tax revenues to offset the gaps from the pandemic.
GAN Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a broader view of the landscape for GAN stock. The weekly rifle chart has been down-trending since peaking just after being added to the Russell Small Cap indexes. The weekly stochastic is completing a full oscillation down through the 20-band. The weekly market structure low (MSL) buy triggers above $17.28 after bottoming off the $14.36 Fibonacci (fib) level. The daily stochastic has crossed up through the 20-band forming its MSL trigger above the $16.36 fib. The falling weekly stochastic may still provide opportunistic pullback levels at the $15.84 fib, $14.52 fib, $13.74 fib and the $13.02 fib. The upside trajectories sit at the $21.28 fib which overlaps with the daily upper Bollinger Bands (BBs) and the weekly 15-period moving average (MA). While still a laggard, it helps to monitor price action with both DraftKings (NASDAQ: DKNG) and PENN.
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