GAN Stock Soars as Company Lands Michigan Tribal Deal, Analyst Waxes Bullish

Posted on: May 24, 2021, 08:24h. 

Last updated on: May 24, 2021, 12:08h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

GAN Ltd. (NASDAQ:GAN) stock is surging Monday. That’s after the gaming technology provider said it inked a deal with the Saginaw Chippewa Indian Tribe of Michigan to deploy its cloud computing services at a casino owned by the tribe.

GAN stock
Giant eagle sculptures greet guests at the entrance of the Soaring Eagle Casino & Resort in Michigan. The venue is a new client of GAN. (Image: The Morning Sun)

GAN will provide its GameSTACK enterprise software to the tribe’s existing technology infrastructure at the Soaring Eagle Casino & Resort, the largest gaming venue in Michigan. The agreement is the fourth of its kind for GAN in that state, which is one of the fastest-growing online casino and sports wagering markets in the US.

“For investors, this new GAN client represents the core customer constituency in the US — major regional casino operators, both tribal and commercial — seeking access to a fast-to-market deployment of a proven enterprise technology solution for launching and developing a competitive product offering across both iGaming and sports betting,” according to a statement issued by GAN.

In early trading, GAN stock is higher by 7.36 percent, good for one of today’s best showings among all gaming equities.

Analyst Like GAN Stock

News of the Soaring Eagle Casino agreement sparked some positive commentary from at least one analyst covering GAN stock.

In a note to clients today, B. Riley’s David Bain reveals a “buy” rating and a $26 price target on the gaming technology firm. That forecast implies upside of nearly 68 percent from the May 24 close and is bold considering GAN came into today saddled with a year-to-date loss of 23.57 percent.

“Anchored by its existing leading US iGaming market share presence, we believe GAN’s online sports betting market share is poised to augment significantly through its new, proprietary sports betting platform/software,” said Bain.

The analyst also highlighted a deal struck last week between GAN and gaming technology purveyor Ainsworth Game Technology Ltd., saying that the accord could be worth $2 to $6 to GAN’s share price. Bain calls that accord “misunderstood/underappreciated.”

As for Michigan, GAN’s continuing efforts to garner market share could pay off for other investors. As CEO Dermot Smurfit notes, the “Michigan market is off to a great start with expectations that it will surpass $1 billion in gross operator revenue in its first twelve months of operations.”

State Trends Look Good for GAN

The UK-based company, which went public last May, provides enterprise software as a service (SaaS) solutions for online casinos and sports betting platforms. That means it’s not a consumer-facing casino or sportsbook brand, but its services are essential for operators to power those platforms.

As such, GAN, like dedicated gaming companies, is levered to state-level regulatory trends. These days, that’s mostly positive.

We believe the trending ‘open online market’ regulation/liberalization framework (such as in Maryland), promoting breadth/diversity of online operators, greatly favors GAN,” said Bain.

“The open online market model promotes licensing of multiple small and middle-market candidates, commercial and tribal, which will need to meet technical and regulatory requirements for forward go-lives without sacrificing a significant first-to-market presence, opening a wider customer base geared to GAN’s proven software and expertise, in our view,” Bain continued.