Why is $GAMB trading as if bankruptcy is inevitable?
Disclaimer: $GAMB holder here. I'm down about 70% on my position, although thankfully it's a relatively small one.
My impression is that the market is pricing this company as if bankruptcy is the most likely outcome.
The affiliate business is clearly performing terribly, but on the other hand the sports data segment seems to be growing nicely. They do have a significant debt load and other liabilities, but my understanding is that management expects to pay these down over the coming years using free cash flow. That seems realistic to me, yet the current valuation suggests the market doesn't believe they'll pull it off.
My investment thesis is fairly straightforward: if they make it through this year in decent financial shape and return to generating solid positive FCF and EBITDA, I could easily see the stock trading 3x higher from current levels. That doesn't seem like an unrealistic scenario to me, which is why I'm not interested in selling at these depressed prices.
I'm also very interested to see whether the sports data business (OddsJam and OpticOdds) can maintain its current growth trajectory. I'm looking forward to the August earnings report.
What I'm really looking for is someone who can explain, in detail, how this company could still end up in serious financial trouble. Am I suffering from confirmation bias or tunnel vision? Am I overlooking something important? Or is my thesis actually a reasonable one?
I'd especially love to hear from anyone with an accounting or corporate finance background who can run through the numbers and explain it in plain English. Feel free to challenge my thesis. I genuinely want to understand the bear case.