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Why Gan Ltd's Shares Plunged 12.5% Today

By Travis Hoium - Mar 26, 2021 at 2:11PM

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Earnings are out, and investors aren't happy.

What happened 

Shares of Gan Ltd (GAN 4.01%) fell as much as 19.7% in trading on Friday after reporting fourth-quarter 2020 financial results. At 1:30 p.m. EDT, shares were down 17.9%. 

So what

Fourth-quarter revenue fell 16.8% to $8.9 million, and the company swung from a net income of $2.4 million to a loss of $8.3 million. The drop in revenue was primarily driven by the ending of a partnership with WinStar World Casino. Analysts were expecting revenue of $11.8 million, so that's where the real disappointment comes from.

Mobile sports betting app on a mobile phone.

Image source: Getty Images.

Beneath the headline numbers, management said that "core B2B SaaS recurring revenue" grew 67% versus a year ago to $25.9 million on an annualized basis in the fourth quarter. And in 2021, management expects revenue of between $100 million and $105 million, up from $35.2 million in 2020. Analysts were expecting $98.6 million in revenue in 2021. 

Now what

The revenue drop is disappointing and was driven by the fact that Gan's partners didn't ramp up online sports betting and iGaming activities in 2020. But partners like Penn National, Wynn Resorts, and Churchill Downs are expanding operations as quickly as they can and will help drive Gan's revenue in 2021.

As long as those customers grow, this will be a great growth stock in the online-gambling space. 

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Stocks Mentioned

GAN Limited Stock Quote
GAN Limited
$3.63 (4.01%) $0.14
Penn National Gaming, Inc. Stock Quote
Penn National Gaming, Inc.
$30.92 (3.97%) $1.18
Wynn Resorts, Limited Stock Quote
Wynn Resorts, Limited
$66.40 (3.85%) $2.46
Churchill Downs Incorporated Stock Quote
Churchill Downs Incorporated
$196.53 (1.90%) $3.66

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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