Enthusiast Gaming (TSX: EGLX) is a Toronto-based integrated gaming entertainment company that is engaged in the media, content, entertainment, and esports businesses in Canada, the United States, and around the world. Today, I want to discuss why this gaming stock is worth snatching up in the early summer season. Let’s jump in.
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How has this gaming stock performed over the past year?
Shares of this online gaming stock have dropped 3.2% month over month as of early afternoon trading on June 26. Meanwhile, the stock has plunged 23% so far in 2023. Its shares have plummeted 79% in the year-over-year period. Investors who want to see more of its recent performance can play with the interactive price chart below.
Here’s why you should seek exposure to this exciting space!
In 2021, Grand View Research estimated that the global esports market was valued at US$2.00 billion. The report projected that this market would deliver a compound annual growth rate (CAGR) of 21% from 2022 through to 2030. Meanwhile, Fortune Business Insights valued the global esports market at US$.45 billion in 2022. The market researcher projected that this space would deliver a CAGR of 21% from 2023 to 2030, reaching $6.75 billion.
Should investors be happy with the company’s recent earnings?
This company unveiled its first quarter fiscal 2023 earnings on May 15. Enthusiast reported a big jump in high-margin revenue streams. Brand Solutions increased 92% year over year to $10.0 million. Moreover, Subscriptions rose 19% to $4.0 million. This led to gross profit growth of 24% to $16.8 million compared to $13.5 million in the first quarter of fiscal 2022.
Enthusiast has undergone a successful transformation from a collection of disparate gaming and media assets to an “enterprise-scale platform company built around a single technology stack,” according to chief executive officer (CEO) Nick Brien. The company is focused on attracting advertising and maximizing the value of these entities going forward.
On the operational side, Enthusiast renewed business or won new business with top brands like Coca-Cola, Toyota Canada, Hut 8 Mining, LEGO, and the United States Navy. Moreover, it completed its first season of NFL Tuesday Night Gaming (NFL TNG), which attracted more than 73 million impressions across livestream and social content. Enthusiast’s TikTok network delivered over 300 million views. Meanwhile, Comscore ranked Enthusiast Gaming as the top gaming property for unique visitor traffic in the U.S.
Enthusiast Gaming: Why I’m buying today
The company delivered esports and entertainment revenue growth of 72% to $3.4 million. Meanwhile, Enthusiast posted a net loss of $8.7 million, or $0.06 per diluted share.
Shares of this gaming stock are trading in very favourable value territory compared to its industry peers. It is on track to post solid revenue growth going forward. Enthusiast still has a long road ahead as it aims to pull in advertisers, but investors should be excited about the potential of the esports space in the first half of this decade.
