Shares were up 40% in premarket trading, after rising 7% on Aug. 10. They were trading before the market open at about 63.5 cents each, a market cap of $18.6 million. Volume was heavy. It was one of the 10 biggest movers in premarket trading.
There was no corporate news to justify the jump, but short interest rose 42% in July.
What Is GMBL Stock?
Esports Entertainment calls itself a “full stack” esports and online gambling company. It offers technology, internet games and events. It also claims the support of major sports leagues.
The company had revenue of $15.7 million in the March quarter, but lost $63.8 million, $2.11 per share, ending the period with $9.4 million of cash. In July it announced monthly dividends on its preferred stock of 10 cents per month. The company has offices in New Jersey, the United Kingdom and Malta.
In addition to the short-squeeze rumors, Esports may also benefit from Massachusetts passing a sports betting bill that will allow up to 15 operators. There are also rumors of an agreement with Hall of Fame Resort & Entertainment (NASDAQ:HOFV), which runs the Pro Football Hall of Fame and is working to expand the attraction.
What Happens Next?
Penny stocks are always volatile and risky.
GMBL is down 87% on the year, after missing earnings estimates for its December quarter. In the last month, however, it is up 47%.
If this move is a short squeeze, gains will disappear quite quickly. If Esports can execute a deal in Massachusetts or Ohio, however, the speculation might last a while. Shares in HOFV rose nearly 10% on Aug. 10 and were up nearly 8% more in premarket trading, after it signed a mobile sports betting agreement.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.