GMBL Stock Drops 17%; Is Esports Entertainment Now a Buy?

The share price of Esports Entertainment Group Inc (NASDAQ: GMBL) has soared more than 30% after announcing its exit from the UK market on Nov. 15. However, the shares retraced after their midweek rally, falling $0.1161 − $0.024 (17.07%) by the end of the closing bell on Thursday, November 17.

Notably, the firm has announced that its online sports betting and casino company SportNation will cease operations in the UK later this month, seeing the price jump as low as $0.16.

Following the strategic review revealed with the company’s financial results on 13 October 2022, investors were relieved of the decision as the online betting and gaming site shifted its focus to its core areas.

GMBL chart and analysis

Over the past month, GMBL has traded between $0.09 and $0.17, which is quite broad. Since the stock is currently trading in the middle of this range, some resistance can be found above. Specifically, GMBL is facing a resistance zone between $0.13 while there is a support zone at $0.11.

Volume has been considerably higher over the last couple of days, as a result, the price action 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 the time of publishing, GMBL is trading well below its 20-day, 50-day and 200-day simple moving averages (SMA).

GMBL support and resistance. Source. data. See more stock up here.

The Esports Entertainment Technical Analysis (TA) summary is in the “sell” zone due to the moving averages (MA) reading “strong sell” at 13 (versus “buy” at 1 and “neutral” at 1 ), while the oscillators remain ‘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 forecast GMBL stock to trade at an average price of $0.15, up 29.20% from its last price of $0.12. Interestingly, the lowest price target is also $0.15, with a “hold” consensus rating for the stock based on its performance over the past three months.

Wall Street analysts’ price targets for GMBL. Source: TipRank

GMBL Stock Key Facts

It is worth mentioning that although the share price has risen more than 12 times its daily average and is still up +0.01 (10.99%) over the past 5 days, the jump was caused by the announcement that the The company reportedly closed two of its UK offices later this month in a bid to cut operating expenses.

While the announcement of the closure of RedZone and SportNation, both businesses acquired by Esports Entertainment in 2020, was obviously greeted with glee by investors, the company lost roughly 98% of its value over the previous year. It reached a peak of $6.67 over the previous 52 weeks but only stabilized at 12 cents on Thursday.

Beyond that, Esports Entertainment said in the statement that the company had a deficit of $153.3 million at the end of the third quarter and that it has a history of making losses.

Despite the fact that shutting down the aforementioned UK firms is a cost-cutting move, the hard truth is that Esports Entertainment definitely requires access to more funding. The question that needs to be answered is whether or not a lender will be willing to offer that money.

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Disclaimer: The content of this site should not be considered investment advice. Investing is speculative. When you invest, your capital is at risk.

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