Update 12:20pm - Updates shares, adds report that says there are no acquisition talks.
"The GameStop surge was just one of the ways Americans have renewed their love of gambling.. GME needs to give their customers list a platform to gamble on video games."
Background:
- Esports Entertainment (NASDAQ:GMBL) is paring some earlier gains, now up 15%, after a Citron Research report indicated why GameStop (NYSE:GME) needs to buy Esports Entertainment.
- It states that for GameStop to maintain its high share price and push further growth, acquiring Esports will unlock potential positives like adding 2M unique gamers to platform, 1000+ connected locations and a analytics platform.
- While Esports Entertainment has had talks in the past on a collaboration with GameStop, they haven't had talks about an acquisition, according a Reuters report.
- Esports three pillars strategy:
Esports Entertainment (GMBL) strengths:
- Helix eSports, acquired by GMBL, owns two of the five largest esports entertainment centers in the U.S.
- GameStop surely is attracted to the doubled gambling of Esports ($14B) in 2020 and also the perfect asset - LanDuel, a proprietary player-vs-player wagering platform, built in Unity, that allows for skill-based wagering on third-party video games.
- Also, GMBL owns the software platform, ggCircuit, which is the backbone of many of the top multi gaming centers (massive Hyper X E Sports arena in Las Vegas).
GMBL strategy and valuation:
- GMBL trades at a fully diluted market cap of $304.7M or just 5-6 times projected FY22 revenue of $70M; industry peers Skillz (NYSE:SKLZ) and DraftKings (NASDAQ:DKNG) trade at 30x and 20x respectively with market cap of $12.18B and $23.61B respectively.
- Synergies and valuations in light with peers price comparisons, an acquiror could easily pay $50 to acquire GMBL.
- GameStop is rallying again today, in the grips of another short squeeze.