Canadian gaming technology provider Bragg Gaming Group (NASDAQ:BRAG) announced today it’s deploying a strategic review as its share price flails, despite what the company describes as impressive quarterly results.
Bragg provides internet casino and sportsbook technology services to gaming operators via its ORYX Gaming brand. The company debuted on the Nasdaq in August after trading over-the-counter in the US under the ticker “BRGGF.”
In March, Bragg engineered a reverse split to boost its share price to come into compliance with the exchange operator’s listing requirement. The stock eventually traded as high as $25.01. But since then, it’s been a steady downward spiral for the provider of proprietary, exclusive, and aggregated casino content, despite rapid growth in the North American iGaming market.
The Board of Bragg Gaming has made the decision to embark upon a strategic review of the overall Company, including the immediate restructuring of the CEO role. The Company’s exceptional performance over the past six quarters includes consistently exceeding revenue and growth targets,” according to a statement issued by the company.
The stock is off 76 percent from its 52-week high, and currently trades around $7.40.
What Strategic Review Could Mean for Bragg
In financial markets, when a company says it’s undertaking a strategic review, verbiage such as “including a possible” is often part of the announcement.
That’s not the case with Bragg Gaming. While analysts and investors see a lengthy runway for iGaming and online sports betting consolidation, particularly for technology purveyors like Bragg, the Canadian company makes no mention of putting itself up for sale. With its share price depressed, a near-term sale may not be in the company’s best interest in terms of maximizing shareholder value.
Speaking of boosting shareholder value, that is one of the objectives of the strategic review, with Bragg noting its shares trade at a steep discount relative to rivals.
“While peers continue to trade and transact at significantly higher multiples, Bragg’s continued strong growth has yet to be reflected in the Company’s public market performance,” the company said in the statement.
Bragg Fundamentals Look Sturdy
There might well be something to the company’s assessment that its stock is undervalued. Bragg is already establishing a track record of topping growth and revenue forecasts – something it’s done for six straight quarters.
Typically, growth companies that are delivering on the top line and beating estimates are rewarded with higher multiples and share prices. But that’s not the case with Bragg. However, the company is looking to ameliorate that situation.
“Bragg’s technology and content is well-positioned to take advantage of this new market’s potential, and although Bragg’s operations have continued to outperform over recent quarters, the capital markets strategy has not translated into shareholder value,” said Chairman Paul Godfrey in the statement. “Developing this alignment will be our top priority and absolutely requires a strategic review.”
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