The stock was plummeting despite record revenue and a new acquisition in the second quarter.
Gambling.com (NASDAQ:GAMB) stock was dropping sharply on Friday, down about 15%, after the company issued record revenue and earnings. Is this a buying opportunity for investors?
The online gambling media and marketing firm, which owns more than 50 gambling websites, had a strong second quarter. It generated record revenue of $39.6 million – a 30% year-over-year increase that beat estimates of $38.9 million.
It had a net loss of $13.4 million in Q2, but that was severely impacted by one-time expenses related to recent acquisitions of OddsJam and OpticOdds.
Adjusted net income, minus those costs, rose 37% to $13.4 million while adjusted net income per share surged 42% to 37 cents per share. That was more than double the 17 cents per share that analysts expected.
In addition, the company announced that it was making another acquisition, buying Spotlight.Vegas, a booking and ticket site for Las Vegas shows, events, hotels, and attractions.
Spotlight.Vegas acquisition complements portfolio
The deal is valued at about $30 million, with $8 million paid at closing and up to $22 million through the end of 2027, subject to certain performance targets being achieved through the end of 2027. The cost will be funded from existing cash and future cash flow.
The company has relationships with more than 40 clients including entertainment venues and several casinos. Spotlight.Vegas users purchased more than $30 million in tickets last year.
Gambling.com expects the acquisition to generate net revenue of at least $8 million in fiscal 2026 and deliver incremental adjusted EBITDA of at least $1.4 million next year.
“The addition of this custom-built booking platform will help drive further monetization of our audience, expands our client base to include land-based operators and gives our digital professionals a new platform to show off their industry-leading marketing talent,” Gambling.com CEO and co-founder Charles Gillespie said. “We are confident that we can better operate this asset through optimized marketing spend and improved conversion. Medium and long term, we expect to deploy the technology on our owned and operated sites like Casinos.com and take it beyond Las Vegas.”
So why was the stock tanking?
This all seems like positive news for the company, yet the stock was trading about 15% lower on Friday shortly after the opening bell at about $8.87 per share. What sparked the selloff?
It likely had to do with its guidance. On the one hand, Gambling.com raised its revenue guidance to a range of $171 million to $175 million for the full fiscal year, up from the previous range of $170 million to $174 million. That would be about a 36% year-over-year increase over the previous year.
The increase is due to four months of contributions from Spotlight.Vegas, with the deal expected to close in September. Also, the launch of sports betting in Missouri in December will help. This will be partially offset by currently weaker search engine rankings following Google’s core algorithm update.
However, it lowered its guidance for adjusted EBITDA to a range of $62 million to $64 million, Adjusted EBITDA range of $62 million to $64 million, from the previous guidance of $76 million to $69 million. That’s still a 29% year-over-year increase, but the fact that it was reduced may have been why investors were selling.
The reduction in the adjusted EBITDA guidance range takes into account higher than previously forecasted costs of sales for its marketing business as well as strategic investments into new digital marketing channels and monetization models. Also, the company doesn’t expect any adjusted EBITDA contributions from Spotlight.Vegas this year.
Should you buy?
Gambling.com stock got several price target downgrades after the earnings were released, with BTIG, Stifel, Truist and Jefferies all lowering their ranges of changing their ratings. Yet three of them maintained a buy rating – BTIG, Stifel and Jefferies – while Truist bumped it down to hold.
The main issue stemmed from the impact of the new Google search algorithms, which could be a headwind, reducing traffic. BTIG reduced its 2026 and 2027 growth outlooks due to these headwinds, but Jefferies only sees it as a short-term issue, putting it on a higher growth trajectory in 2026.
The stock is down 40% YTD but analysts are still bullish, with all but one of the nine analysts that cover it giving it a buy rating. The median price target is $18 per share, which would suggest 103% upside over the next 12 months. Some of these downgrades may lower that, but still, analysts see significant upside.
Friday’s selloff seems a bit overblown but it represents a potential buying opportunity for investors. With a low P/E of just 10, higher earnings potential in 2026 with the new acquisition, and the still robust revenue growth projections, Gambling.com stock may be worth a look.
