Please ensure Javascript is enabled for purposes of website accessibility

Why GAN Stock Rose as Much as 11.5% Today

By Reuben Gregg Brewer - May 24, 2021 at 2:55PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The online gambling services company announced a deal that will expand its business.

What happened

Shares of GAN Limited (GAN -1.58%), a provider of business-to-business (B2B) and business-to-consumer (B2C) online gambling products and services, rose by more than 11% at one point during Monday trading. Although by roughly 2:45 p.m. EDT, the stock's advance had fallen to just 6.5% or so, the news driving it was still an important sign of growth.

So what

GAN's B2B offerings help casino operators provide online betting to their customers. This is an up-and-coming business in the U.S. market as more and more states are legalizing these digital alternatives to in-person gambling. On Monday, the company announced that it had inked a deal with Soaring Eagle Casino & Resort in Michigan -- its fourth client in that state.  

Five people at a casino table with an employee dealing cards.

Image source: Getty Images.

The key here is for GAN and Soaring Eagle Casino & Resort to take the casino's database of customers and monetize it in the digital space. The deal spans both typical casino gambling and sports betting. The new online gambling service is expected to launch in the fall. While financial terms were not disclosed, adding a new client is a clear sign of progress as the company looks to expand its footprint.  

Now what

GAN is a relatively small company with a short history in the public market. It also isn't profitable, which isn't shocking given the way tech companies need to invest as they expand. Although it operates in an interesting and growing niche, conservative investors will probably want to monitor GAN for a bit longer before jumping aboard, given some of the risks inherent in its business. More aggressive types who see a big future for online gambling, however, might want to take a closer look, as the potential for growth is real even if the red ink is likely to keep flowing in the near term.  

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends GAN Limited. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GAN Limited Stock Quote
GAN Limited
$3.73 (-1.58%) $0.06

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.