iGaming platform Golden Nugget Online Gaming (NASDAQ: GNOG)
stock recently exploded higher on a definitive acquisition agreement from Draft Kings (NASDAQ: DKNG)
in an all stock deal. The transaction is expected to close in Q1 2022. The transaction is a fixed ratio of 0.365 shares of Draft Kings stock per one GNOG share. Tilman Fertitta owns 46% of Golden Nugget Online stock agreed to hold DKNG shares for a minimum of one-year from the closing of the transaction. The announcement on Aug. 9, 2021, caused shares to halt at $12.27 and reopen at $18.25 before shares continued to climb. While this is an acquisition play, there appears to still be appreciation and fluctuations in the share price especially in conjunction with moves shares of DKNG. The deal is still subject to shareholder approval and regulatory approval. The sports betting and iGaming tailwinds
continue to flourish with the NFL season starting with post-pandemic reopening
with live events
underway. The legislative momentum has 32 states already allowing sports betting with four states on the way. GNOG recently released strong Q2 2021 earnings which further propelled momentum. Prudent investors that wish to gain exposure in the iGaming and sports betting tailwinds can watch for opportunistic pullbacks before the completion of the acquisition.
Q2 FY 2021 Earnings Release
On Aug. 16, 2021, Golden Nugget reported its Q2 2021 earnings and 1st half earnings for the quarter ended in June 2021. Revenues rose 27.7% year-over-year (YoY) to $31.7 million for Q2 2021 and up 38.6% for H1 2021 to $58.4 million. Net loss for Q2 2021 was (-$1.6 million) compared to $100,000 net income in same period year ago. Net income for have of 2021 was $68.1 million compared to $4.3 million in the prior year period. Active first time depositors (AFTD) grew 110% in Q2 2021 while 12 month active depositors grew 108% YoY. AFTD for H1 2021 rose 313% YoY. Golden Nugget Online chairmen and CEO Tilman Fertitta commented, "We are proud to have achieved another solid quarter driven by the strength of our new customer growth both in our established and newer markets. Golden Nugget Online Gaming continues to successfully execute on our national expansion, while concurrently strengthening our capabilities and product offerings with key partnerships. In Michigan, we grew market share and are very pleased with the trajectory of growth in the early quarters of our operations. We expect similar trajectories for our planned launches in Virginia, West Virginia, and Pennsylvania later this year. In addition, our partnership with Boom Entertainment will only strengthen our award-winning content offerings. We are increasingly encouraged by our results and look forward to executing on the significant and growing market opportunity available to us."
Q2 2021 Milestones
The Company signed a partnership with Boom Entertainment which includes a minority equity investment and preferred and exclusive content, bespoke game development and market access rights in Ohio. The partnership will, “give GNOG the ability to offer more content at a faster pace and targeted to our player base to enhance player experience.” The GNOG app is available on Google Play Store in New Jersey and Michigan. In New Jersey, the Company is continuing the completion of its 1,800 square foot expansion to its Live Dealer Studio. This will bolster dealer tables to 33 from 18 and is expected to be live by Q3 2021. In Michigan, the Company deployed 103 new games from nine different suppliers on web, iOS, and Android in the quarter. GNOG successfully launched Live Dealer iGaming on July 22, 2021, as one of the first wave of operators for the state.
GNOG President Thomas Winter stated, "GNOG continues to show strong growth with our results in the first half of this year. In Michigan, we more than tripled our market share since launch which validates our steady, ROI-focused growth investments. In the second quarter we grew gross gaming revenue, or GGR, 99% over the first quarter while the rest of the market only grew 35%. In July, the positive trend continued with GGR over $5.3 million, a 32% increase over the monthly average in the second quarter, making GNOG the fifth largest iGaming operator in the state, with a market share of 5.7%. In New Jersey, where market revenues had been boosted by the pandemic last year, we were still able to grow net revenues by 8.9% in the first six months of 2021 compared to the prior year period. Our latest agreements highlight yet another big step in executing on our market expansion plans by adding the states of Ohio and Arizona to our list of potential future markets and we look forward to launching online casino and sports when legislation and regulations permit. GNOG's focus on innovation and exclusive games is also on full display with our partnership with Boom Entertainment. Our players can look forward to continued innovation from our best in-class online casino."
GNOG Price Trajectories
Using the rifle charts on the weekly and daily times frames enable a precision view on the price action for GNOG stock. The weekly rifle chart peaked on the $27.09 Fibonacci (fib) level and triggered a weekly market structure high (MSH) selloff on the $23.58 breakdown to $10.10 lows. The recent gap and go caused the weekly stochastic to violently cross back up through the 80-band. The weekly 5-period moving average (MA) is attempting to catch up at $18.89 followed by the 15-period MA at $14.55. The weekly upper Bollinger Bands (BBs) sit at $23.00. The daily rifle chart has a pup breakout from the gap with a rising 5-period MA support at $21.88 and 15-perid ma $20.52. The daily market structure low (MSL) buy signal triggered on a breakout above $19.31. The daily BBs are contracting with daily upper BBs pointing inwards at $23.77. The daily stochastic peaked near the 100 band and is forming a potential mini inverse pup below the 90-band or a cross up to trigger a thrust towards the daily upper BBs. Prudent investors should avoid chasing and wait for opportunistic pullback levels at the $20.07 fib, $19.31 fib, $18.17 fib, $17.37 fib, $16.67 fib, $15.49 fib, and the $14.24 fib. Upside trajectories range from the $24.74 fib to the $37.63 fib level.
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