Lottery.com SPAC Shares Soar on Bullish Revenue Forecast

Posted on: October 22, 2021, 11:13h. 

Last updated on: October 22, 2021, 11:38h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of Trident Acquisitions Corp. (NASDAQ:TDAC), the special purpose acquisition company (SPAC) merging with Lottery.com, are soaring again Thursday. That’s after the internet lottery retailer delivered bullish third-quarter revenue guidance.

lottery.com
Lottery.com SPAC shares surge. The company released bullish sales guidance. (Image: SPAC Feed)

In midday trading, shares of the blank-check company are higher by 9 percent on volume that’s more than six times the daily average. That comes after the stock surged 9.47 percent on heavy turnover yesterday. Over the past two days, Trident Acquisitions is one of the best-performing SPAC equities, trailing only Digital World Acquisition (NASDAQ:DWAC) — the shell company serving as the vehicle to bring former President Trump’s social media enterprise public.

Lottery.com said it expects sales for the September quarter to come in between $22 million and $24 million, implying sequential growth of more than 135 percent.

On a preliminary basis, revenue through the first nine months of 2021 is expected to be between $36.8 million and $38.8 million on a reported basis and $38.7 million and $40.7 million on a pro forma basis,” according to a statement.

Texas-based AutoLotto does business as Lottery.com. The company allows consumers and businesses to purchase lottery tickets online and via mobile devices, and offers “real-time results on more than 800 lottery games from more than 40 countries.”

Lottery Assets Heating Up

In February, Trident and Lottery.com agreed to a merger, setting the stage for the target to become a public company. The internet lottery retailer is expected to have a post-transaction enterprise value of $526 million, with $45 million in cash.

The deal was announced at the height of SPAC fever. That was prior to a stretch of significant retrenchment for blank-check equities with merger partners across multiple industries, not just gaming. When the combination was announced, Trident shares surged, flirting with $17, only to slip below $11 in August. On the back of the positive revenue forecast, the blank-check stock is up 32 percent from its 52-week low.

While SPAC stocks took their lumps this year, Lottery.com has some tailwinds, including market participants awakening to lottery investment thesis. In one sign of related demand, Scientific Games (NASDAQ:SGMS) is planning to part with its SG Lottery unit. It’s got compelling options, including an Australia initial public offering (IPO), which could fetch $3 billion or more, or selling the fast-growing, profitable enterprise to a private equity firm. There are believed to be multiple suitors.

Lottery.com has its own favorable tailwinds.

“From 2016 to 2020, Lottery.com grew gross revenue at a compounded annual growth rate of 322 percent, and forecasts gross revenue equal to approximately $71 million in 2021, $280 million in 2022, and $571 million in 2023,” according to the company.

Lottery.com Compelling Outlook

As digital gaming grows, it is online casinos and sports wagering that are commanding most of the headlines and the bulk of investors’ attention and capital.

However, iLottery offers its own compelling growth trajectory. As Lottery.com notes, just four percent of $430 billion in global lottery sales currently occur online. The company also has significantly lower customer acquisition costs than online sportsbook operators.

“Lottery.com has benefited from a customer acquisition cost of $4.01, with those users producing an average of $30.90 of gross revenue in their first year,” it said.

The company operates in 11 states and is looking to more than triple that figure to 34 by the end of 2023.