GMBL shares fall 17%; Esports Entertainment now a buy?

Esports Entertainment Group Inc (NASDAQ: GMBL) share price had risen more than 30% after announcing its exit from the UK market on November 15. However, the stock pulled back after the midweek rally, falling to trade at $0.1161 − $0.024 (17.07%). at the end of the closing bell on Thursday, November 17.

Most notably, the firm announced that its online casino and sports betting company SportNation would cease operations in the UK at the end of this month, with the price rising as much as $0.16.

Following the strategic review revealed with the company’s financial results on October 13, 2022, investors were relieved by the decision as the online gambling and betting site turned its attention to its core areas.

GMBL Chart and Analysis

In the last month, GMBL has been trading between $0.09 and $0.17, which is quite wide. Since the stock is currently trading in the middle of this range, some resistance may be found above. In particular, GMBL is facing a resistance zone oscillating at $0.13, while there is a support zone at $0.11.

Volume has been considerably higher in recent days, as a result price movement has been a bit too volatile to find a solid entry and exit point, and therefore it is probably best to wait for a consolidation first.

At press time, GMBL is trading well below its 20-, 50-, and 200-day simple moving averages (SMAs).

GMBL support and resistance. Font. Data from Finviz.com. see more stock here.

Esports Entertainment Summary Technical Analysis (TA) is in the ‘sell’ zone as the MA indicates ‘strong sell’ at 13 (versus ‘buy’ at 1 and ‘neutral’ at 1 ), while oscillators remain at ‘neutral’ at 6 with ‘sell’ at 6 and ‘buy’ at 3, respectively.

GMBL 1 day technical analysis. Source: TradingView

On Wall Street, two analysts offering 12-month price targets have projected that GMBL shares will trade at an average price of $0.15, up 29.20% from the last price of $0.12. Interestingly, the lower price target is also at $0.15, with a ‘hold’ consensus rating on the stock based on its performance over the past three months.

Wall Street analyst price targets for GMBL. Source: TipRanks

GMBL Stock Key Facts

It is worth mentioning that although the stock price increased by a volume that was more than 12 times the daily average and is still above +0.01 (10.99%) in the last 5 days, the jump was caused by the announcement that the company would close two of its UK locations at the end of this month in an effort to reduce its operating expenses.

Although the announcement of the closures of RedZone and SportNation, both businesses that Esports Entertainment bought in 2020, was obviously welcomed by investors, the company lost around 98% of its value over the course of the previous year. It peaked at $6.67 over the previous 52 weeks, but only settled at 12 cents on Thursday.

In addition to this, Esports Entertainment said in the filing that the company had a deficit of $153.3 million at the end of the third quarter and that it has a history of losses.

Even though shutting down the aforementioned UK companies is a cost-cutting move, the hard truth is that Esports Entertainment certainly requires access to more funding. The question that must be answered is whether or not a creditor will be prepared to offer that cash.

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Disclaimer: The content of this site should not be considered as investment advice. The investment is speculative. By investing, your capital is at risk.

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