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Why Gan Ltd Shares Plunged 19.6% Today

By Travis Hoium – Aug 17, 2021 at 2:06PM

Key Points

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Earnings fell short of expectations in one key area.

What happened 

Shares of online-gambling industry services provider Gan Ltd (GAN 0.73%) fell as much as 19.6% in trading on Tuesday after reporting second-quarter 2021 financial results. Shares didn't bounce much off their lows early in the day and are still down 17.3% as of 1:30 p.m. EDT. 

So what

Revenue jumped 316% to $34.6 million on the back of the Coolbet acquisition, which has been a great addition for this growth stock. Sequentially, revenue rose 24.4% and topped the $34.5 million that analysts were expecting.

Two hands holding a smartphone with a sports betting app.

Image source: Getty Images.

Investors were more disappointed on the bottom line, where net loss was $2.7 million, or $0.07 per share. That's compared to an expected loss of just $0.01 per share.

For the full year, management expects revenue of $125 million to $135 million, growth of 270% versus 2020 and the midpoint. That's tremendous growth for any company, even if less than expected is flowing to the bottom line. 

Now what

Gan actually saw a sequential decline in revenue from business-to-business (B2B) customers from $13.5 million in the first quarter to just $10.6 million last quarter. That was more than offset by the business-to-consumer (B2C) market growing to $24 million from $14.3 million a quarter ago, but the B2B decline is concerning, nonetheless. 

Taking a step back, there were ups and downs, but overall, this online-gambling company is still growing like crazy. And as it launches new products and expands markets, we should see growth continue.

I think that the company will overcome a slight earnings miss short term. For investors looking at a decade of growth coming to online gambling, this is a great buy and hold stock, even if it will be volatile in the meantime. 

Travis Hoium owns shares of GAN Limited. The Motley Fool recommends GAN Limited. The Motley Fool has a disclosure policy.

Stocks Mentioned

GAN Limited Stock Quote
GAN Limited
$1.37 (0.73%) $0.01

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