When The Market Tide Is Rising All Ships Move Higher
It is true that when the market tide is rising, all ships move higher. What is not true is that all stocks within a group are worth your investment in such conditions. That’s why it pays to follow the money and see where it goes. Not because we want to follow the leader but because so many other traders do and when it comes to the market you want to be where the money is. You still want to be choosy but, in nearly all cases, good stocks in a good market that are loved by their customers and investors outperform all others. When it comes to markets, the online gaming market is one of the hottest today and one driven by pandemic-induced stay-at-home lifestyles and increasing levels of legalization. New Jersey is one of the most visible to benefit from legalization trends having just reported a 50% YOY increase in monthly revenue driven by a 90% increase in online gaming.
1. Super League Gaming Is Connecting Gamers
Super League Gaming (NASDAQ:SLGG) operates a community and content platform for video gamers. The platform enables users and developers multiple ways to interact including game-play-driven experiences, clubs and the chance to compete in events. And the company has been very successful at it, emerging just before the pandemic struck and benefiting from stay-at-home tailwinds the entire time. Revenue accelerated in the 2nd quarter of 2020 growing nearly 50% sequentially and YOY to $324 million and has only seen increasing figures in the time since. The latest quarter saw revenue top $770,000, up 197% YOY, and these metrics are expected to stick. People love their games.
The latest news comes in the form of a capital raise. The company sold 1.5 million shares at $9 per for expected proceeds of $13.6 million. The money will be used for general administrative purposes, marketing, development, and CAPEX. Shares of the stock wobbled a bit on the news but the bulls held their ground. Assuming no bad news comes out we expect to see this stock consolidate and move higher into the $15 to $17 range.
2. Rush Street Interactive Winds Up For Another Run
Shares of Rush Street Interactive (NYSE:RSI) began a reversal earlier this month when the company reported earnings. The company beat top and bottom-line estimates and raised guidance on strengthening trends within the iGaming industry. Among them are growing chances that New York will legalize online gambling which is why Rush Streets’ early acquisition of licensing is so important. All the company needs now is the go-ahead and it can begin operations in New York state.
In Oppenheimer’s view, the stock is a buy even without New York in the picture. According to them is that Rush Street’s differentiators and experience are driving customer growth and retention and that is a good thing. Now, with share prices consolidating above the short-term moving average, we see this stock moving up to retest resistance at the all-time high before breaking out and moving into the upper $30-range.
3. DraftKings Is A Top-Pick In Online Gaming
When it comes to New York and the potential of online gaming Loop Capital says DraftKings (NASDAQ:DKNG) is a top-pick. Based on New Jersey’s data the New York market could be worth several billion dollars in annual revenue and the industry leaders are going to see the largest share.
"Based on New Jersey’s sports betting and iGaming GGR per capita last year, we estimate the online gaming opportunity in New York could be roughly $3bn... As a result, we are especially optimistic about the market opportunity potential in NY for our top pick, Buy-rated DKNG, which has already secured market access rights through its partnership with del Lago Resort & Casino."
