Advertising, Acquisition And Potential Subscription Model Point To $6PT For Super League Gaming

On Thursday, esports company Super League Gaming Inc (NASDAQ: SLGG) received a bullish analyst initiation and comments on the company’s multiple avenues of growth.

The Super League Gaming Analyst: H.C. Wainwright analyst Scott Buck initiates Super League Gaming with a Buy rating and has a $6 price target.

The Analyst Takeaways: Super League Gaming has 3.7 million registered users and over 72 million annual hours of engagement for its content, making it a fast player in the esports sector.

“Sufficient scale and product mix should allow the company to begin monetizing its significant customer base driving an acceleration in revenue and improving underlying profitability,” Buck wrote in a note.

The recent acquisition of Mobcrush could help the company become a top 50 media company and attract new advertisers.

“The combined companies are expected to reach more than 25.0 million players per year and 85.0 million viewers per month making it a top 50 U.S. media property as verified by Nielsen."

Related Link: ESPN Exits eSports Segment: What This Means For Streamers, Stocks

The increased viewership and engagement could grab new advertisers that are targeting Millenial and Generation Z consumers, Buck notes.

“We expect advertising to drive revenue growth of 158.8% in 2021 and 123.8% in 2022 as the company targets larger advertising campaigns.”

The esports industry could grow from $1.5 billion in 2020 to $6.8 billion by 2027 according to estimates. Buck said the Covid-19 pandemic could have accelerated these estimates.

A possible shift towards a subscription model could also boost revenue, Buck said.

“We believe the company may eventually pursue a subscription model for many of its premium services which we believe would substantially improve member monetization and revenue visibility.”

A $9.99 monthly subscription could increase Super League gaming’s revenue more than four times 2022 estimates with monetizing 10% of its four million users, Buck said.

Price Action: Shares of Super League Gaming closed up 2.78% to $4.81 on Thursday. Shares of Super League Gaming have traded between $1.63 and $11.20 over the last 52 weeks.