GAN Sees Value in Battered Stock, Reveals $5 Million Share Buyback

Posted on: December 1, 2021, 07:36h. 

Last updated on: December 1, 2021, 12:27h.

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

Gaming technology provider GAN Ltd. (NASDAQ:GAN) said its board of directors approved a $5 million share repurchase program.

GAN buyback
GAN CEO Dermot Smurfit, seen above in a tree-side interview. His company said it will repurchase up to $5 million in stock. (Image: The Times)

That could be a sign the company sees value in its downtrodden stock, which lost nearly a third of its value last month alone and is lower by 52.32 percent year-to-date. Investors are cheering the news, as shares of GAN are higher by 6.41 percent in early trading.

Share repurchases under the new authorization may begin immediately and the program will expire on May 31, 2022,” said the company in a statement. “The shares will be repurchased with cash on hand and cash from operations. Any shares repurchased will be returned to treasury for cancellation.”

The buyback is GAN’s first shareholder rewards program since its May 2020 initial public offering (IPO). Formerly GameAccount Network, the company provides software-as-a-service (SaaS) solutions for iGaming and sportsbook operators.

GAN Buyback Details

As is the case with any share repurchase scheme, GAN is under no obligation to buy back the full $5 million worth of stock. The company can also scrap the program at anytime.

Should the company buy back $5 million worth of its shares, that would represent 1.1 percent of its $427.51 million market capitalization. Based on the Nov. 30 closing price of $9.67, a $5 million buyback at that price would remove more than 517,000 of GAN’s 42.06 million shares outstanding from the market.

“We also recognize the value opportunity that has developed in our stock and want to be prepared to act opportunistically during periods when the share price becomes significantly dissociated from our future earnings potential,” said CEO Dermot Smurfit in the statement.

While GAN stock is getting drubbed alongside a variety of gaming peers this year, some analysts remain bullish on the name, with at least one noting it could be a takeover target.

Buyback Bonanza Arrives in Gaming Space

While the announcements are coming from smaller and mid-sized companies, and the dollar figures aren’t high, share repurchase programs are returning to the gaming space.

Accel Entertainment (NYSE:ACEL), one of the largest distributed gaming operators in the US, said in late November it will buy back up to $200 million worth of its equity.

Accel joins International Game Technology (NYSE:IGT) and Melco Resorts & Entertainment (NASDAQ:MCLO) in recently announcing buyback plans. Additionally, last month Red Rock Resorts (NASDAQ:RRR) said it’s paying a $3 per share special dividend, and that it’s buying up $350 million worth of its own shares in a Dutch auction.

Some large-cap gaming companies are sitting on sizable amounts of cash, and with their stocks recently sagging, those operators could be compelled to announce buyback programs.