Shares of GAN Limited (NASDAQ:GAN) fell as much as 19% on Tuesday after the company reported earnings and a big acquisition. At 12:20 p.m. EDT today, shares were still down 15.6%.
Third-quarter net revenue was up 86% to $10.3 million, easily topping the $10.0 million that analysts expected. But the company, a business-to-business supplier of internet gambling software as a service, reported a net loss of $4.1 million, or $0.14 per share, and an adjusted EBITDA loss of $114 million.
The other big news was the acquisition of Vincent Group, or Coolbet, for 149 million euros ($176.5 million). Coolbet brings with it sports betting technology and 26 million euros of revenue over the past 12 months. GAN management thinks the acquisition could make it a leader in the growing sports betting business globally.
The market's reaction is a little strange given the positive results from GAN and an acquisition that should drive growth. The purchase of Coolbet is for cash and stock, so there could be some dilution of shares, but I think acquiring established brands in this space will be a good move long term. In reality, some of the shine might be wearing off GAN Limited's sports betting play as traders look for other growth stocks to bet on in the market.