Growing young populations and changing lifestyles have led to increased demand for video games over the past couple of years. In addition, growing engagement activities, formidable investments, increased live streaming of games, and expanding infrastructure for league competitions are major factors driving the esports industry’s growth. The number of esports viewers is expected to increase 11.5% year-over-year to 29.6 million in 2022.
Furthermore, virtual reality products and consumer spending on video content are witnessing rapid growth worldwide. The global esports market is projected to reach $7.13 billion by 2028, registering a CAGR of $25.1%.
Therefore, Wall Street Analysts expect fundamentally sound esports stocks Genius Sports Limited (GENI), Esports Technologies Inc. (EBET), and Esports Entertainment Group Inc. (GMBL) to rally more than 100% in the upcoming months.
Genius Sports Limited (GENI)
GENI manufactures and sells technology-leading products and services to the sports, sports betting, and sports media industries. It also provides technology infrastructure collection, integration, and distribution of live data of sports leagues; streaming solutions, consisting of technology, automatic production, and distribution for sports to commercialize video footage of their games; and end-to-end integrity services to sports leagues.
Last month, GENI announced procuring a major official live streaming and fan engagement partnership with Betway, a universally prominent online sports betting and gaming brand. With this new agreement, Betway will receive GENI's award-winning LiveData and LiveTrading products, which give real-time data and pinpoint pricing for the NFL and NCAA Basketball and the English Premier League and Euroleague Basketball, as part of its long-standing partnership.'
Also, last month GENI obtained a significant expansion of its long-term partnership with bet365. Being one of the first sportsbooks to execute Genius Sport’s live streaming service, bet365 also agreed to a major elevation in the company's premium video content comprising low latency broadcasts from several top tier global soccer competitions and the NFL to bet365 customers outside the U.S. Genius Sports' and expanded streaming solution which will deliver unique new content to help improve bet placement and customer retention for bet365.
GENI's total revenue increased 70.5% year-over-year to $69.14 million in the third quarter ended, September 30, 2021. Its cash and cash equivalent stood at $234.24 million, representing an increase of 1888.3% for the nine months ended September 30, 2021
Analysts expect GENI's revenue to increase 71.7% year-over-year to $80.72 million in the fourth quarter (ending December 2021).
Out of the eight Wall Street analysts that rated GENI, seven rated it Buy, and one rated it Hold. The 12-month median price target of $14.86 indicates a 180.4% potential upside. The price targets range from a low of $9.00 to a high of $22.00.
Esports Technologies Inc. (EBET)
EBET primarily develops and operates platforms that emphasize esports and competitive gaming worldwide. The company's brand portfolio constitutes Karamba, Hopa, Griffon Casino, BetTarget, Dansk777, GenerationVIP, and gogawi.com, a licensed online gambling platform that offers real money betting on esports events and professional sports.
In December, Turnt Gaming, a developer of interactive NFT-based entertainment products and media, collaborated with EBET and Polygon Studios, Polygon's gaming/NFT arm designed to enable web 3.0 integration. This collaboration will serve as an essential mainstay for Taunt Battleword, a skill-based fighting game simulator featuring legendary boxing icons Floyd Mayweather and Deontay Wilder targeted to release in early 2022.
EBET's net sales increased significantly to $7.14 million in the first quarter ended December 31, 2021. Its gross profit came in at $2.53 million, compared to a gross loss of $1.47 thousand in the prior-year quarter. Its cash and cash equivalent grew 29.7% for the three months ended December 31, 2021, to $11.76 million.
EBET's revenue is expected to increase 38% year-over-year to $99.20 million in fiscal 2023.
The one Wall Street analyst that rated EBET rated it Buy. The 12-month median price target of $18.00 indicates a 105.1% potential upside.
Esports Entertainment Group Inc. (GMBL)
Headquartered in Europe, GMPL is an iGaming entertainment company that operates in the United States and globally. The company operates Vie.bet, an esports focused platform; Sportnation.bet, an online sportsbook and casino; iDefix, a casino-platform; Bethard, an online sportsbook and casino; Vie.gg, an online esports wagering website; and ggCircuit, a local area network center management software for managing mission-critical functions, such as game licensing and payments.
In December, GMBL partnered with the Hard Rock Hotel & Casino Atlantic City, which will be launched by hosting the first sanctioned esports skill-based wagering event in the United States. "We are extremely excited to partner with one of the top global hotel and casino venues to kickstart the world of regulated peer-to-peer wagering in esports," said Grant Johnson, CEO of Esports Entertainment Group.
In the second quarter ended, December 31, 2021, GMBL'S net sales increased 515.2% year-over-year to $14.53 million. Its cash and cash equivalent stood at $1.04 million.
Analysts expect GMBL's revenue to increase 423.9% year-over-year to $28.29 million for the third quarter ending March 2022. The stock has gained 16% over the past month.
The 12-month median price target of $19.67 indicates a 562.3% potential upside. The price targets range from a low of $12.00 to a high of $30.00.
GENI shares were trading at $5.17 per share on Wednesday afternoon, down $0.13 (-2.45%). Year-to-date, GENI has declined -31.97%, versus a -11.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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