PreMarket Prep Stock Of The Day: Gan

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

With sports coming back into the spotlight, many issues that focus on sports wagering, such as Penn Gaming PENN and DraftKings DKNG, are making new all-time highs almost on a daily basis. However, not all issues in the sector are participating in the rally.

One going in the opposite direction is Gan Limited GAN and is the PreMarket Prep Stock Of The Day.

The Company: Gan, which stands for GameAccount Network, provides software-as-a-service solutions for online casino gaming and sports betting applications. The company segments include Real money iGaming operations and Simulated iGaming operations.

The customers of the company include large regional operators and individual tribal casino operators.

Fast Start Out Of The Gate: With limited issues coming to market amid the COVID-19 crisis, and the investing world always hungry for IPOs, Gan was the center of attention on May 5. More importantly, the performance of its industry peer DraftKings since its debut as a public company was fresh in investors’ minds.

Gan has never traded lower than its opening print on May 5 ($10.60) and ended its first session at $13.25. Its initial surge nearly took the issue to $16, but gave investors a few chances to purchase shares under its closing price on day one ($13.25) on back-to-back days May 13-14.

In a volatile fashion, it didn't peak until July 8 ($28.95) and posted its all-time closing high a few days prior at $27.58.

Big Declines: The issue hovered at the $27 area for several days in early July, until some large investors wanted out of the issue in a hurry. As a result, it was crushed in back-to-back sessions on July 9 ($27.15 to $25.69) and July 10 ($25.69 to $23.01).

It attempted to rally off that beatdown, but as volume started to dry, it became evident that interest was waning in the issue.

All Bets Off After Q2 Report: After the close on Aug. 20, the Street wasn't impressed with its second=quarter earnings. In fact, the issue had its worst day ever, falling from $25.17 to $20.68 on monster volume. Following that day, all rallies were greeted with nothing but sellers.

Horrible Relative Strength As Of Late: While other gaming issues roared higher, aided by favorable analyst coverage, Gan went nowhere and drifted lower until the hammer came down in Tuesday’s session. Once again on no news, the issue swooned from $19.58 to $17.71 on much heavier than average volume. Meanwhile, Penn Gaming and Draftkings made new all-time highs.

Triple D Avoiding The Issue: The issue was discussed in detail on today's show following its thrashing on Tuesday. Co-host Dennis Dick, who has been tempted to go long the issue, is hands off for now.

“I want to buy it, but I cannot figure out why it is not rallying with the other issues in the sector," Dick said. "If this is supposed to be the thing behind the thing, then why isn't rallying with the others? Either no one knows about it or cares about it."

The timing of the fall in Gan's stock price and the launch of the Barstool Sports App for sports betting could correlate. Due to its relationship with Penn National, it appears some of the gains in Gan's stock price had been from the upcoming launch of the Barstool app.

Barstool partnered with GTG Network on its new sports betting app. The GTG Network news came out Tuesday, coinciding with Gan's fall. GTG Network provides sports data and insights for the app.

“I can clarify that GAN is not involved in the PENN/Barstool relationship. GAN is the simulated gaming software provider for Penn, as announced in this August 20th press release,” the spokesperson said.

Look Out Below? Since making its all-time high, the low in the issue had been $17.56 until yesterday when it bottomed just below that $17.50 and closed just off that low at $17.71. It attempted to rally off the open, but was turned back well ahead of Tuesday's high ($19.82) only reaching $18.46 and then turned lower.

At this time, it has breached Tuesday’s low, reaching $17.46 as of 12:25 p.m. ET and is not far off that level.

Based on the daily charts, the next potential support levels come in at the pair of lows flanking $17, from June 11 ($17.26) and June 12 ($16.85). Beyond that, the next pair of daily lows to lean on are from May 26 ($15.38) and May 27 ($15.20).

The full discussion on the issue from today’s show can be found here: