Stock of the Week: GAN (GAN)

Much like last week’s Common Room Stock of the Week, Penn National Gaming (PENN), GAN, formerly known as GameAccount Network, is well-positioned to take advantage of the 2018 Supreme Court decision which overturned Nevada’s monopoly on sports gambling. That decision, which in addition to allowing casinos across the country to open sportsbooks, lets them take advantage of the technological increases that let any smartphone offer all the options of a physical casino – minus the cigarette smoke – from sports gambling to social gaming options, such as online blackjack, poker, and slots. That is where London-based GAN comes in, as the company is one of the world’s leading providers of the IT infrastructure and back office tools that give casinos or other organizations the technological options to offer online or mobile applications for social gaming, real money gambling, or in-casino experiences with its award-winning GameSTACK technology. GAN was also the first company in the world to offer its partners the ability to reward players offline for their actions online when they rolled out their iBridge Framework technology.

In my mind, two things set GAN apart from the competition in this space, and make this stock one that should continue to grow over time. First, GAN has been around much longer than many of their competitors, having been founded in 2002. Though since the Supreme Court decision, sports betting is now legal in 18 states (and DC), with a passed bill in 4 additional states and active legislation in 9 others, the United States is still well behind Europe in terms of the prevalence of sports betting and penetration of online real-money gambling applications. However, GAN has a long history of partnering with major English and Irish sportsbooks, having worked with SkyBet since 2003, Paddy Power and Sportingbet since 2004, and William Hill since 2007. In contrast, the only options for the US market that stretch back that far are either homegrown casino systems or poorly maintained illegal systems based offshore.

That longevity provides GAN the second competitive advantage – the breadth of options they provide and range of partners they work with. In addition to their initial work with many of the large British and Irish sportsbooks, GAN offers technical and back-office infrastructure to support the full range of casino operations, and has been a consistent leader in the space. GAN earned an eGaming award back in 2006 for a multiplayer blackjack system and developed some of the first casino gaming apps for the iOS and Android space in 2011, among many other accomplishments. Also, in addition to sportsbooks, GAN counts some of the largest gaming entities and companies as clients, such as Lottomatica, Rank Group, Scientific Games, Shuffle Master, IGT, and FanDuel. In recent years, GAN has focused on expanding its presence with physical casinos in addition to online offerings, because with the 2018 Supreme Court decision, casinos look to expand their reach – someone doesn’t need to be in Las Vegas to play at a Vegas casino.

Though GAN’s stock has been up and down in the past month, it has surged this summer from a 52 week low of $10.60 in spring 2020. In fact, all four Wall Street analysts who have issued reports on the company in the past year have rated the stock a “Buy” due to the future potential that the legalized gambling market offers when combined with continued technological increases. The average price target for the stock is $27.83, giving it ample room to increase from the $19.58 close on September 14th. In sum, like Penn National Gaming, GAN is another well-positioned leader possessing multiple competitive advantages in a growing market.

Note – The Common Room is not affiliated with the financial services industry in any way.

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