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Why Gambling.com Stock Just Plummeted 15%

By Rich Duprey – Nov 18, 2021 at 12:27PM

Key Points

  • Gambling.com came up shy on the top line, but beat analyst expectations on the bottom line.

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The online gambling marketing firm actually reported a fairly robust quarter.

What happened

Shares of Gambling.com Group (GAMB -0.62%) fell hard in morning trading Thursday after the marketing specialist for the online gambling industry reported third-quarter earnings before the market opened. 

The stock was down 17.7% at 12:07 p.m. ET. The stock market as a whole, however, also opened lower, with the Dow Jones Industrial Average falling more than 200 points (about 0.8%) shortly after the open. By early afternoon, however, the major indexes had largely bounced back from their earlier declines.

Two people excited and happy about something they have just seen on one of their smartphones.

Image source: Getty Images.

So what

Gambling.com's earnings report was actually quite good, though its revenue of $10.1 million fell just shy of the $10.4 million consensus forecast. Earnings of $0.10 per share handily beat Wall Street's estimates of $0.07 per share.

CFO Elias Mark asserted that the marketing company's sluggish 37% revenue growth and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of 34% were "healthy despite a seasonally slow quarter."

He noted the company had previously warned that both metrics could deviate from their 40% target rates as it invested in the business, pursued mergers and acquisitions, and incurred costs associated with going public.

Gambling.com's IPO was held in late July after it priced its shares at $8. Even after Thursday's sharp decline, the stock is up by more than 50% from there, and has nearly doubled from the low point it touched in mid-August.

Now what

Mark said he foresees Gambling.com exceeding its 40% target rates for revenue growth and adjusted EBITDA margin for the full year.

The company's strong relative performance last quarter bodes well for the future, and given the gains that the stock has made this year, Thursday's sell-off could just be a case of profit-taking. 

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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