Thread by @puppyeh1

This is obvi a v illiquid stock traded OTC so not for everyone...but prob worth noodling on a little more. $GLXZ

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https://twitter.com/OtterMarket/status/1383110489467604992

@OtterMarket hits nail on the head, pre-COVID this was a $9mm EBITDA biz w 20% EBIT margins and pretty decent historic FCF generation.

Makes sense - they own their own content and just take a piece of casino hold on tables where they're games are installed...

iGaming is kind of a hidden tailwind, post PGP acquistion its maybe 20% (?) of the rev pool but growing rapidly. They are plugged in w some REAL heavy-hitters like $EVO tho and in general its kind of a stealth play on iGaming adoption...

Obvi these iGaming revs are high high margin, high-calorie goodness (given basically just licensing-related) so ceteris paribus as this % grows its 👌for earnings power of the biz...

Meanwhile since 2019 the only major change in the land-based biz is now they're in a bunch of (large) new mkts like Cali, etc, where before the redemption of Saucier's stake they couldnt get in. Ie, rev growth opportunity...

End of the day this is kinda a 'have your cake and eat it too' play. Land-based casino rebound = great for $GLXZ given the increased leverage to physical gaming (and in more places than in 2019). But increase in iGaming = incr in royalty revs (v high margin)...

The legal risk is kinda like jet fuel here too. People look at B/S and see ~$40mm of debt but its a promissory note to the founder. its not 'real' debt and - absent a total disaster - will be retained as essentially v favorable cost of financing.

So this is a tiny, dodgy, microcap SUPER levered (financially, operationally) to the reopening (casinos) w a backdoor kicker on secular growth in iGaming...

All for something like 8-10x EV/EBITDA on next yr's numbers....not >10x sales as most other iGaming plays...

I'm not sure what the endgame is here. I would guess taken out by a bigger player. Maybe an uplist to the 'DAQ once its a bit bigger and lawsuit is resolved.

Frankly either/or is easy to see 2x,3x upside imo.

But there's also considerable legal risk and a few other bogies...

Namely it is a v v v illiquid stock and disclosures are pretty poor (understatement). Moreover I don't love the auditor turnover (and small unknown auditor) either...so caveat emptor.

But its hard to find secular/recovery plays anywhere near these prices...so yeah. I own small.