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Golden Nugget Online Gaming: Management Continues To Execute On All Cylinders

Apr. 05, 2021 8:58 AM ETDraftKings Inc. (DKNG)4 Comments


  • Management bumped up 2021 revenue guidance indicating their strategy is being executed flawlessly.
  • GNOG will launch iGaming in four more states in 2021 where we expect they will continue to gain market share over time.
  • We believe GNOG is gaining market share in MI, and we expect further share gains moving further in the state.
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~13% increase in 2021 revenue guidance highlights further upside potential. Reiterate BUY rating and $24 target price.

Data by YCharts

Q4:20 Highlights

  • GNOG reported Q4:20 revenue of $23 million which was in line with the pre-announced range offered in February. NJ was the only state where GNOG was live during the quarter, where revenue grew 48% YoY. EBITDA for the quarter was $6.2 million, with 27% margins. For 2020, revenue grew 64% to $91 million and EBITDA grew 62% to $29m with 32% margins.
  • Alongside Q4:20 results, GNOG offered 2021 revenue guidance of $130-$145 million. At the mid-point, this as a 13% increase versus the prior 2021 guide offered in June 2020 and implies revenue growth of 51%. Management also reiterated expectations for operating losses in 2021.
  • By the end of 2021, GNOG expects to offer online wagering in 6 states: NJ, MI, WV, VA, IL and PA. GNOG already launched in MI; although, market share has been slightly underwhelming. By mid-summer, management expects to launch online sports betting (OSB) and iCasino in WV and OSB in VA. In the fall, the company expects to launch iCasino in PA and OSB in IL.
  • We increase our 2021E and 2022E revenue forecasts by 14% and 10% but reduce EBITDA alongside higher marketing costs.

2021 RISKS

  • Lower-than-expected market share in newly launched states.
  • Delays in expansion into new markets, primarily WV, VA, IL and PA.

Q4:20 Highlights

GNOG reported Q4:20 results in line with expectations; although, shares declined 14% in response to the result. We believe weakness was related to the market-wide sell-off in tech stocks, as well as GNOG’s underwhelming QTD market share in Michigan. That said, we expect steady market share gains in MI moving forward as GNOG remains disciplined with advertising. The company will launch iGaming in four more states in 2021, where we expect GNOG

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Analyst’s Disclosure: I am/we are long GNOG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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