GAN
by 270jap | August 21, 2020 3:19 pm
GAN is down 17% today (20.77 as type). It was covered on this website last I see on June 19th, and was bullish at $22… Anyone adding on this drop?
Source URL: https://www.stockgumshoe.com/2020/08/microblog-gan/
GAN looks tempting here. I’m considering selling a couple of Sept 17.50 Puts. Wouldn’t mind getting assigned the shares if they end up in-the-money. If the puts expire worthless, I’ll have collected a modest premium. Win-win either way.
Still a buy for me near $20-22, though I haven’t added since I bought in June. I posted some updated thoughts on this on Friday, but in case you missed that here’s a little excerpt:
So how do I sum up my thoughts from all of this? I think GAN is still attractive as a small player (market cap only $600 million) levered to the rapidly growing spread of online gambling in the US… largely because they are so small, and so focused on being a cloud software provider and technical partner, that they have strong margins and do not trade at an outlandish valuation (at least, not compared to the brand names like Draft King (DKNG). GAN is likely to post an adjusted profit of about 30 cents a share this year on $38-40 million in revenue, and I expect margins to improve as they grow — so they’re trading at just over 15X sales, and about 65X adjusted earnings, but if Michigan comes online and their Tier 1 customer actually gets announced and is as positive as they’ve led us to believe, I expect revenues to at least double over the next 2-3 years, and the earnings per share should scale quickly as that happens.
There is absolutely some real risk of loss here, the shares could fall back below $10 if growth stocks crash, particularly if that happens at a time when the NFL cancels the season and sports gambling investors give up, but given where the business stands now, including the loss of part of their FanDuel business, I think the highest probability is that the shares will be in the mid-$30s within a year or so. $35 a share would mean roughly a $1 billion market cap, which would be roughly 20X forecasted 2021 sales of $51 million… though I think that sales number for next year is likely to be too low, given the expected new state and new customer launches and the continuing strong growth of online casino igaming in their existing states.
I added to my position in GAN on Monday (the 24th) when it went even lower. I snatched up more shares at $19.75.
I fully expect this stock to make me feel like a genius on the days it skyrockets and like a dumb-ass on the days it drops like a lead balloon.
On the bad days, I like to look at the stock chart of Netflix to remind me of how even a 75% drop is no big deal in the long run. Netflix has had 3 drops that big in the last 20 years plus a few drops around 50%.
But then I remember there’s also stock charts that aren’t as pretty . . . like BlackBerry.
So I’m of the mindset that any money I dump into GAN is just like going to the casino.
I’m just a gambler masquerading as an investor here.
I bought after mention here and research. got stopped out after 25% trailing limit- fastest money I ever lost. Should have just gambled on the site.