GAN - A SaaS Stock That's Taking on the Gambling Industry | Stocks For 2021

GAN is one of the stocks I'll be adding to my holdings in 2021 and in this video I detail why.

At its core, GAN is a SaaS provider for online casino gaming allowing anyone to use its services to setup and operate online gaming experiences. The company has multiple turn-key solutions that handle everything from customer support to playable online games.

A recent acquisition of Coolbet gives GAN a complete B2B online gambling solution. Businesses can use the entire GAN suite, or just the pieces they need to get their online operations afloat. This acquisition will be realized in 2021 and was funded via an oversubscribed equity raise at $15.50 giving us a floor for the company’s valuation.

GAN has a multitude of offerings and casinos can elect to use any or all of them in their own operations. Key to the suite is the patented iBridge Framework. The iBridge Framework connects online players to their loyalty accounts at physical casinos. Players that have already built a substantial rewards profile locally can now carry that same profile online.

Simulated Gaming allows casinos to offer an online casino experience where players can engage with almost every type of game, they’d traditionally find on a casino floor. If a business wants to offer real-money experiences, GAN has been providing those for more than 15-years via its Real Money Gaming technology stack.

The services division ties everything together by offering Customer Support services (to players of social and real-money experiences), game theme development, and custom platform development.

In short, GAN offers everything a casino would need to get up and running in a compliant way. These services are used around the world today.

GAN is a relatively small firm with trailing-twelve-month revenues of $36.95M. It is, however seeing significant year-over-year growth in those numbers.

Revenues in the three months ended September 30th were $10.27M, up from $5.5M the year prior. Over the nine-month period, $26.26M in 2020 versus $19.28M in 2019.

As this is a rapidly growing space with the need to move fast, the company is running at a net loss of $4.1M per quarter. This grew significantly from the years prior value of $1.69M lost in the third quarter.

From the balance sheet side of things, GAN is looking solid. With $57M cash on hand at the close of the third quarter and no long-term debts, the company has a good runway from which to work.

The market is still young, particularly in the United States. GAN operates in just three U.S. markets today, with the expectation that more will be coming online in 2021. As each additional state legalizes online gambling, GAN will have significant work to do to ensure their platform in compliant with the rules and regulations of that particular state.

With its existing toolset, though, GAN already has many pieces of the technology in place that could help bring land-based casinos online much faster than they otherwise could have.

Large casinos like Wynn are already trusting GAN to run the online experience in Michigan. Chuchill Downs, too, will use GAN’s technology. Even larger names in the space such as Fanduel use some of GAN’s solutions.

In a recent investor presentation, GAN, utilizing data provided by Eilers & Krejcek (“E&K”) as well as Macquarie estimated that the U.S. online real-money gaming space would generate north of $30B annually. In its own estimates, GAN believes its partners will be able to capture 20-30% of that space, with a rough 5% of that capture being GAN’s revenue share. Should the company’s numbers come to fruition, the potential revenue opportunities by 2030 sit at $360-$510M. This number is the U.S. market ONLY. GAN operates across Europe and also sees potential in South America going forward. If the company can execute on its plans, revenues in 2030 could surpass $1B thanks to new markets legalizing the technology.

The aforementioned legalization of gambling online around the world is the most significant catalyst to growth. GAN is operating in a handful of states today, but more are coming online each year. Working with existing ground-based casinos, GAN will be able to assist in bridging the gap from the physical to online world allowing existing establishments to keep in touch with customers wherever they are.

Michigan presents the largest near-term catalyst for GAN with three operating partners going live in Q4 of 2020. GAN estimates the state will bring in $1.2B in gaming revenues by 2025, of which GAN will be able to capture north of $20M with its technology.

This video was made by Ash Anderson. Ash is long GAN stock and plans to invest in GAN in the 72 hours after this video releases. This video is not a solicitation to buy GAN and should not be considered investment advice. It is for entertainment purposes only. Please consult a financial advisor before investing.

GAN, Investing, Investing in stocks, Finance, Stock Picks 2021