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Sunday, June 4, 2023

Taking Stock of Elys Game Technology’s Risk Factors

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Shares of Elys Game Technology, Corp. (ELYS) are up 110% over the past 12 months. Elys is an interactive gaming and sports betting technology company.

Let’s take a look at Elys’ latest Q2 financials, as well as what has changed in its key risk factors that investors should be aware of.

In Q2, organic growth in European operations helped Elys process $220.1 million in betting handle, and its betting handle conversion to gross gaming revenue (GGR) reached $14.9 million. These factors helped Elys achieve total blended revenue of $11.7 million, beating consensus estimates of $9.87 million.

While Elys’ land-based operations remained closed amid COVID-19 lockdowns, it expects portions of these operations to re-open by the start of the 2021-22 soccer season in Europe.

Higher operating expenses led to a consolidated net loss of $2.7 million, compared to a net loss of $2 million a year ago. (See ELYS stock charts on TipRanks)

Elys executive chairman Michele Ciavarella remarked, “With these remarkable second-quarter results and the current trends across our businesses, we remain on track to meet or exceed our 2021 objectives.

“Considering the significant tailwinds boosting the entire sports betting and i-gaming sector in new markets both in Canada and the U.S., and a number of strategic growth opportunities on the radar in Europe, we remain confident in the sustainability of our long-term vision and growth strategy.”

On August 24, H.C. Wainwright analyst Scott Buck reiterated a Buy rating on the stock, with an $8 price target.

Buck commented, “Longer term, we continue to believe the company’s differentiated U.S. gaming product should allow the business to create a profitable niche within the growing U.S. market. U.S. expansion coupled with improving market share in the consolidating Italian market should continue to drive record operating results, scaling the business towards profitability.”

Maxim Group’s Jack Vander Aarde also has a Buy rating on Elys, with a price target of $10. The two ratings add up to a Moderate Buy consensus rating for Elys. The average Elys Game price target of $9 implies 73.1% potential upside for the stock.

Now, let’s have a look at what’s changed in the company’s key risk factors profile.

According to the new TipRanks Risk Factors tool, Elys’ main risk category is Finance & Corporate, accounting for 43% of the total 60 risks identified. Since June, the company has added four key risk factors.

Three of these new risks are under the Finance & Corporate risk category. Elys highlighted that the issuance of common shares to sellers upon reaching certain milestones related to the recent USBookmaking (USB) acquisition will dilute the equity ownership of current investors which could depress the market price of the company’s shares.

Second, the combined company is expected to provide strategic benefits that would help Elys accelerate its business plan, via increased access to the U.S. sports betting and online gaming market. If these results do not materialize, then Elys’ share price may suffer.

Third, any failure to successfully integrate the acquired USB business with Elys’ present management and structure may negatively impact Elys’ financial condition, results, and stock price.

The fourth new risk to Elys, under the Tech & Innovation category, is that USB has had limited operations so far. This exposes USB to risks such as the ability to implement its business plan, market acceptance of its offerings, undercapitalization, and competition from better-funded and well-established companies. There is no guarantee that USB’s activities will be successful, or lead to any revenue.

The sector average Finance & Corporate risk factor is 37%.

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The post Taking Stock of Elys Game Technology’s Risk Factors appeared first on TipRanks Financial Blog.

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