Shares of Allied Esports Entertainment (NASDAQ:AESE) are moving much higher today. At the time of writing, AESE stock is up 16% on some pretty interesting developments in the esports sector.
Here’s what’s going on with Allied, and why investors should keep their eye on this stock from here.
E-Sports Booming Amid Acquisition Speculation
There’s a ton of speculation in the esports sector. All because of a recent tweet from Ryan Cohen, CEO of GameStop (NYSE:GME), depicting a McDonald’s (NYSE:MCD) ice cream cone and frog emoji.
Wait, what? Why?
Well, the Reddit crowd appears to believe this cryptic tweet is decodable. Some believe this tweet references the potential for GameStop to move into the esports sector. The frog and ice cream have been connected to Super League Gaming’s (NASDAQ:SLGG) CEO.
Additionally, on Feb. 25, Citron Research released a report suggesting GameStop buy Esports Entertainment Group (NASDAQ:GMBL). This has poured gasoline on what was already a hot sector prior to these announcements.
The leaps some investors are making today require a pretty high degree of speculation. Nonetheless, SLGG’s shares have been up dramatically in recent days. Yesterday, SLGG stock increased by 30%, and was up by a similar margin this morning.
Allied appears to be riding the wave of speculation in this sector. The r/WallStreetBets crowd is certainly one heck of an influential force.
Allied’s ESports Focus Positive for AESE Stock
The announcement made in January that Allied would be selling its poker-related business, including the World Poker Tour, has investors excited.
Not only was the $78 million deal a nice cash infusion for the company, it included a guaranteed revenue share of 5% of WPT-branded tournament entry fees, up to a maximum of $10 million over the next three years.
This deal focuses the Allied’s attention on its esports business. Given the interest the esports segment is receiving right now, that’s a great thing for investors.
AESE stock is another esports stock with tons of speculative upside. However, investors should remain cautious about going “all-in” on these stocks amid the hysteria. Indeed, a lot needs to happen for these rapid stock price moves to be justified.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.
