Since the advent of the internet, observers have long noted the technology’s potential to disrupt the gambling industry. Rather than take a trip to Las Vegas, participants could place their wagers online and expand the consumer base exponentially. However, federal laws preventing certain activities, particularly online sports betting, hampered the use of the internet for gaming purposes.
However, a groundbreaking legal victory in New Jersey’s Supreme Court in May 2018 opened the door for sports wagering, allowing any state to legalize the practice if it so desires.
Gambling.com Group Financial History
Billed as a multiaward-winning performance marketing company, Gambling.com primarily focuses on the iGaming and sports betting markets. Its primary means of revenue generation is through referring gaming enthusiasts to online gambling operators. Here, the company enjoys two catalysts, the main one being the judicial tailwind that opens the door to online sports betting throughout the U.S. Second, the COVID-19 pandemic brought new eyeballs to the broad wagering sector, potentially bolstering GAMB stock.
While enthusiasm for Gambling.com’s upcoming public debut is nothing short of exceptional, investors should note that it features a relatively small financial footprint compared to the major players in the online gambling space. For instance, in the private equity arena, the company only had one funding round, with investment service firm Edison Partners raising $15.5 million on Sep. 5, 2019.
However, it’s also fair to point out that as a marketing firm, it’s not a direct play on the online gaming phenomenon. As well, the smaller financial profile of GAMB stock allows for greater profitability potential as it’s possible that speculators — driven by social media outlets as an example — could drive shares much higher than its IPO price.
Most importantly, Gambling.com’s financials themselves are impressive. In 2020, the company generated top-line sales of nearly $28 million, up 45% from 2019’s tally of $19.3 million. Further, while the company suffered a net loss of $1.9 million in 2019, Gambling.com brought home positive net earnings of over $15 million in 2020. To be profitable out of the gate will certainly give confidence to those betting on GAMB stock.
Gambling.com Group Potential
When it comes to the upside potential of Gambling.com Group, prospective buyers focus on the underlying numbers, which are incredibly enticing. According to a Market Research Future analysis, the global online sports betting market will likely grow from nearly $25 billion in 2019 to $59.5 billion in 2026, representing a compound annual growth rate of 13.6%.
However, other estimates suggest an even more lucrative backdrop for GAMB stock. For example, Grand View Research states in its report that the worldwide online gambling sector enjoyed a valuation of $53.7 billion in 2019. By 2027, the company projects that it will produce revenue of $127.3 billion. For context, the market capitalization of DraftKings is $17.6 billion at the time of writing. Thus, Gambling.com and the entire industry benefits from a massive addressable market.
Further, the legalization movement for sports betting is off to an auspicious start since the favorable New Jersey Supreme Court ruling. According to ESPN.com, just prior to GAMB stock going public, 22 states have already legalized sports betting. And 8 states have recently passed bills, suggesting burgeoning demand from the public.
Be aware, however, that the legislative development is not entirely positive. Among the top 10 states by gross domestic product (GDP), 4 of them — California, Texas, Georgia and Washington — feature challenging legislative circumstances. A prime example is California, where sports betting may be a reality but only at tribal casinos. Keep in mind that these 4 states represent approximately 29% of the U.S. GDP.
Still, the bottom line could be the COVID-19 crisis, which may have sparked at least a semi-permanent consumer behavioral shift. As well, any dubiously upward progression of the pandemic would incentivize online activities, thus taking advantage of GAMB stock.
How to Buy Gambling.com IPO (GAMB) Stock
Typically, financial advisors steer rookie investors away from IPOs due to their complexity and potential volatility. But if you’re interested in pursuing new issues, it helps to have a background of the process.
An IPO is an example of a primary market transaction. Here, a company creates new equity units and distributes them for the first time, usually with the help of underwriting financial firms who bring together institutional investors with the new-share-issuing entity.
Historically, public retail buyers found themselves shut out of the IPO process since institutional clients are more profitable to underwriters. Therefore, most individuals buy shares at the open in the secondary market, an example being the Nasdaq or New York Stock Exchange.
While going this route is often more expensive, you can participate in public market debuts without any commitments to buy other pre-IPO shares. And, the process is simple. If you already know how to buy stocks, you can jump in right away. If not, just follow the steps below.
Step 1: Pick a brokerage.
In prior generations, investors often chose brokerages based on cost considerations. Today, the emphasis is on features. For instance, a growing number of online brokers and mobile investing apps like Robinhood allow retail buyers to participate in the pre-IPO process; that is, the ability to buy new shares at their initial offering price.
If you’re interested in building your IPO portfolio, consider brokers that facilitate pre-IPO access. Below is a list of the best brokers to choose from.
Step 2: Decide how many shares you want.
Because your share count determines your risk-reward profile — a higher count equates to greater potential rewards but more risk and vice versa for a lower count — you’ll want to pick a number that you’re comfortable with.
Step 3: Choose your order type.
Before placing your order, familiarize yourself with these market concepts:
- Bid: The highest price a buyer will offer, the bid is always lower than the ask.
- Ask: The lowest price a seller will accept, the ask is always higher than the bid.
- Spread: Primarily the difference between the bid and ask, the spread is also a risk and liquidity indicator. Narrower spreads suggest strong willingness to negotiate, thereby indicating higher liquidity and lower risk. The opposite is true for wider spreads.
- Limit order: An order placed to be fulfilled at a predetermined price, limit orders offer full control but no execution guarantee.
- Market order: A market order guarantees fulfillment at the going rate but at the least favorable terms (like buy orders on the ask).
- Stop-loss order: Use a stop-loss order to automatically protect you against downside volatility. However, such orders will fulfill at either a predetermined price or any price lower than the requested rate.
- Stop-limit order: A stop-limit order exits your position only at a predetermined price, which can be a liability if the target stock keeps dropping.
Step 4: Execute your trade.
To execute a market order, follow these steps:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders, with the exception that you also enter your desired execution price.
Pulling the Handle on GAMB Stock
Games of chance have always enticed people. But with the compelling combo of connectivity technologies and a favorable legislative environment, the Gambling.com Group IPO has already enticed millions of retail investors. Though some headwinds exist, positive public sentiment and the fortuitous impact of COVID-19 make GAMB stock an intriguing bet.