As earnings season rolls on, BetMakers Technology Group Ltd [ASX:BET] is the latest stock to give shareholders a welcome result.
The BET Share price is currently trading 9.82% higher at time of writing, rising strongly on the back of a mixed final result.
Let’s examine why investors are looking at the upside and bidding this stock higher.
Strong revenue growth, but a huge net loss blowout
First up, when it comes to revenue growth, BetMakers is going strong.
A $19.4 million sales total was a tidy 126% increase over last year’s result. Reinforcing the fantastic gains made during the year and the potential for further growth to come.
However, this improved revenue snapshot is starkly contrasted with a $17.4 million net loss. A 715% increase year-on-year!
In other words, an eightfold magnification of their bottom-line result.
Not exactly the kind of figure most shareholders want to see in an annual report.
Which begs the question, why are traders bidding the stock higher today?
Well, it all comes down to the fact that this net loss result is a little deceptive. A large portion of this final figure is due to the recent $56.2 million takeover of Sportech’s racing assets. A deal that is certainly costly (relative to BetMaker’s sales) but should provide greater sales growth in the quarters and years to come.
As CEO, Todd Buckingham commented in the annual report:
‘The Sportech acquisition and acceleration of the Company’s strategy in the United States market, including Fixed Odds betting on horse racing, were highlights in a transformational year for BetMakers on the global wagering stage.
‘By continuing to pursue strategic opportunities, such as the acquisition of Sportech PLC’s racing and digital assets, we are investing in global opportunities that we believe can achieve significant scale for the Company while also providing financial strength for the global horse racing industry as it competes with other sports, both for audiences and share of wagering.’
So, it seems investors are buying into this ‘scalable’ vision for the stock. Willing to overlook a large net loss today, with the hopes of bigger returns in the future.
What’s next for the BetMakers Share Price?
Speaking of future returns, it seems BetMaker’s core focus for the foreseeable future is exactly that.
The company should have all the assets it needs, and the tailwind of a steadily burgeoning betting market in the US to deliver positive results from here on out.
As management made clear today, with operations across 30 countries and a multitude of wagering partners, they have a global footprint. Foundations that should give them a solid chance at building some strong sales momentum.
However, with a $1 billion market cap, investing in this stock today isn’t cheap.
New shareholders are certainly paying a premium for an expectation of huge future growth.
So, if you’re looking for small-cap stocks with similar kind of potential, but without a hefty price, then we’ve got the report for you. This list of seven Aussie stocks has compiled some of the most fascinating and disruptive companies the ASX has to offer.
We promise you won’t find a collection of more exciting companies. Which is precisely why it is worth checking out now.
Because as BetMaker’s has shown, the investor appetite for scalable future growth is strong.
Regards,
Ryan Clarkson-Ledward,
For Money Morning
PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here
