Shares of Gan Ltd. fell 4.8% in Monday’s extended trading session after the casino gaming and sports betting company surprised investors with a larger loss in the third quarter.
Gan’s (GAN) 3Q loss of $0.14 per share, widened from the year-ago quarter’s loss per share of $0.09 and fell short of analysts’ earnings projections of $0.02 per share. Meanwhile, 3Q revenues spiked 86% to $10.3 million and were in line with the Street’s estimates.
Gan CEO Dermot Smurfit said, “Our new customer pipeline in the U.S. remains strong and we’re building exciting relationships that we believe have the ability to scale across our customers’ casino portfolios as more states come online in the future. Our business remains strongly positioned to leverage the momentum of online sports betting and iGaming, which is clearly accelerating across the globe.”
The company also announced the acquisition of Vincent Group (Coolbet) in a deal worth €149 million. Gan anticipates to complete the transaction in the first-quarter of 2021 and expects the acquisition to be immediately accretive. (See GAN stock analysis on TipRanks).
Smurfit commented that “The acquisition will allow GAN to provide near-turnkey capabilities in Online Sports Betting, rounding out our B2B [business-to-business] platform offering in the U.S. We view this acquisition as the next strategic move in our growth strategy as we look to diversify our business model and geographic exposure.”
Ahead of the earnings release, on Nov. 9, Northland Securities analyst Greg Gibas reiterated a Buy rating on the stock with a price target of $30 (65.9% upside potential) on expectations that Gan would at least match his 3Q revenue estimates. In a note to investors, Gibas wrote, “We believe that as a key technology / infrastructure supplier for the growing US online gaming market, GAN offers an attractive investment opportunity due to its attractive market share and differentiated technology /IP [Intellectual Property].”
Currently, the Street has a bullish outlook on the stock with a Strong Buy analyst consensus. The average price target stands at $28.83 implying upside potential of about 59.5% to current levels. Shares are up 36.5% since the stock started trading on Nasdaq on May 5.
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