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Why Golden Nugget Online Gaming's Shares Plunged 12.6% Today

By Travis Hoium - Updated Mar 24, 2021 at 4:17PM

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High growth may not be enough for investors.

What happened 

Shares of Golden Nugget Online Gaming (GNOG) fell as much as 12.6% in trading on Wednesday after announcing fourth-quarter 2020 financial results. At 3:30 p.m. EDT shares were down 12.2% and look to close near their lows for the day. 

So what

In the quarter, Golden Nugget Online Gaming reported a 48% increase in revenue to $23.0 million and $6.2 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Net loss was $42.8 million in the quarter, but that's to be expected with the high cost of completing its special purpose acquisition company (SPAC) merger.

Person making wager on game online.

Image source: Getty Images.

For 2021, management expects revenue of $130 million to $145 million, a 51% increase from 2020 at the midpoint. This is where investors may have been a little disappointed with the results. MGM Resorts said it would double revenue from online gambling in 2021, and DraftKings, which is about 14 times larger by revenue, expects to grow revenue between 40% and 55%.

Now what

As one of the smaller online gambling companies, Golden Nugget Online Gaming needs to grow quickly to get a decent market share. That's why the company's growth rate is so important. As much as it's disappointing to see shares down today, the company is still growing quickly in a great industry and is expanding into more states. If you're willing to hold onto this growth stock long term and ride out the volatility, this is still a company with a lot of potential. 

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