What happened
Gambling.com (GAMB -0.11%) stock is sinking Thursday. The online-gambling marketing company's share price was down 10.2% in today's trading session as of 11 a.m. ET, according to data from S&P Global Market Intelligence.
Gambling.com published a press release after the market closed yesterday announcing a substantial secondary stock sale. While the offering will not increase the total amount of shares outstanding or dilute existing shareholders, the large sale is putting downward pricing pressure on the stock.
So what
Per Gambling.com's press release, a group consisting of Edison Partners IX, Mark Blandford, and Gerard J. Hall have launched an underwritten secondary offering to sell 4.25 million shares of the company's common stock. The underwriters of the offering will also have a 30-day option to purchase an additional 637,500 ordinary shares of Gambling.com stock.
Now what
While the secondary stock offering won't have any fundamental impact on Gambling.com's business, it could make it hard for the company's share price to gain ground in the near term. Heavy institutional selling may be interpreted as a loss of confidence, and the amount of stock being sold here looks quite significant.
The betting specialist has a total outstanding share count of roughly 36.5 million and a public float of roughly 8.8 million. Meanwhile, it looks like the secondary offering will result in roughly 4.9 million shares being sold.
GAMB PS Ratio (Forward) data by YCharts
Gambling.com is currently valued at roughly 15.3 times this year's expected earnings and 3.8 times expected sales. Last quarter, the company grew its revenue 36% year over year to reach $26.7 million, and its net income rose 47% to hit $6.6 million.
For a business that's been growing at a rapid clip, Gambling.com actually looks quite cheaply priced trading at its current valuation levels. On the other hand, it's clear that investors still have some doubts about whether its growth as an online gambling-focused marketing company is sustainable.
