Top Online Casino Stocks To Watch As We Enter Into The Final Quarter Of 2020
Casino stocks have taken a beating as the coronavirus crisis raged globally. But could now be an ideal time to place your bets on online casino stocks? Or is it too late? Perhaps you are perplexed as to why we are looking at a battered industry. Well, there are a few reasons for that. First, the National Football League (NFL) season has returned in recent weeks.
Second, more physical casino operators have succumbed to pressure to embrace online sports betting in the bid to stay afloat amid the pandemic. It doesn’t take an expert to know that online casinos are making record profits. After all, all physical casinos had to shut during the pandemic. As a result, a few important companies are investing in online segments, betting on long-term gains. For these reasons, top online casino stocks have been among the best stocks to buy for investors.
High Growth Opportunities In The Online Casino Industry
Big names casinos including Las Vegas Sands (LVS Stock Report) and Wynn Resorts (WYNN Stock Report) have suffered dramatic declines in revenues due to the COVID-19 pandemic this year. Many are now in the process of reopening, while most have decided to adopt the ‘wait and see’ attitude. Yet, others have decided to embrace online sports betting. The online casino sector has seen massive growth in recent years. The market might have been worth over $53 billion last year, and it continues to grow. Gaming giant (MGM Stock Report) decided to seize the opportunity and doubled down on online betting investments.
“What you saw was when at the height of the pandemic, all of our resort casinos were closed. The only place that the company was making money was on sports betting and gaming online casino and poker,” George Kliavkoff, MGM Resorts’ President of Entertainment & Sports
Online casinos rose into stardom as many people shy away from large crowds to avoid the insidious virus. Recall that sports betting has only been legalized in the U.S. since 2018. The market is still very much in its nascency. There’s a huge opportunity for online casinos to scale up their businesses in a massive way. The top online casino stocks have only recently begun gaining traction this year. Investors looking for the next big thing may want to consider these online casino stocks moving forward.
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Top Online Casino Stocks To Watch For Q4 2020: DraftKings
Shares of DraftKings (DKNG Stock Report) have jumped more than 45% in the past month. This came after the company announced a deal with ESPN. Also, the company has also secured another sports partnership, with an exclusive deal with the New York Giants. Under this deal, DraftKings will become the Giants’ official sports betting and daily fantasy sports partner. This further allows DraftKings to access team trademarks and logos, which could support efforts in developing the brand in the gambling arena.
And with the kickoff of the 2020 NFL football season, investors have the right to be all bullish as we are in the midst of the “busy season” of sports betting. Don’t get me wrong though. This isn’t a screaming buy, but I am not saying you should be bearish. With increasingly fierce competition from both small and large casino players, it may be tough for DraftKings to live up to expectations. With a limited football schedule next year, there are fewer games for the public to bet on. Whether the DKNG stock will have another push will likely be dependent on the returning of the NBA.
At a valuation of almost 47 times trailing sales, DraftKings needs to achieve strong growth to justify the premium. Many investors believe the company will benefit from the increasing legalization of sports betting and international expansion. But the ESPN deal certainly helps DraftKings in acquiring new users. Nevertheless, the share price has already gone up so much this year. One should consider if the upside has been priced in.
Top Online Casino Stocks To Watch For Q4 2020: Penn National Gaming
Penn National Gaming (PENN Stock Report) has climbed 30% for the past month, cruising along with the rally among online casino stocks. PENN stock has been the favorite among investors because of its Barstool Sports wagering platform. Granted, DraftKings does have the first-mover advantage on its side. Yet, what this company lacks is its own Dave Portnoy. The Barstool impresario, who has become more famous than ever thanks to his foray into day trading, has helped drive more attention to Barstool.
Penn National “has the potential to gain significant share in online betting, driven by their partnership with Barstool providing a differentiated customer acquisition strategy,” McTernan noted, adding that “while we continue to expect DraftKings and FanDuel to be leaders in the online betting space given their first-mover advantages … Penn could already have their ear, an envious position.”
As you may or may not know, the company owns and manages traditional gaming, racing properties, and operates video gaming terminals with an emphasis on slot machines. As we are a few weeks into the National Football league (NFL), many investors are anticipating that PENN stock could benefit immensely from its stake in Barstool Sports. Barstool is big with younger millennial bettors. With the recently launched mobile betting app from Barstool, the investment could pay off in more ways as the NFL season progresses.
Top Online Casino Stocks To Watch For Q4 2020: GameAccount Network
The last online casino stock to watch is also the smallest on this list. GameAccount Network (GAN Stock Report) offers technology solutions and a white-label platform for online casino and sports betting applications. GameAccount Network’s software-as-a-service (SaaS) is used by major casino operators to capture strong growth driven by a trend of legalization at the U.S state level along with the rise of mobile gaming applications.
The company’s business model has been likened to Shopify’s (SHOP Stock Report). GameAccount Network allows physical casino operators to easily take their gambling business online, without having to develop everything from the ground up. The customers include large regional operators and individual tribal casino operators. The beauty of GAN is that you don’t have to bet on the success of anyone’s operator in particular. Rather, you are betting on online casinos as a whole.
On August 20th, GAN reported its second-quarter financial results for 2020. These results showed that revenue had increased by 99% year over year. In addition, there was a 110% increase in real money internet gambling revenue to $5.7 million. If you are hopeful that online casinos will proliferate, GAN stock would be one of the best online casino stocks to watch. This comes as more operators intend to shift or expand their operations online. You could also view GAN stock as one of the best ways for investors to gain exposure to this important market segment through a pure-play technology provider to the industry.