Not every online gaming play is as obvious as something like DraftKings (DKNG) or Lancadia Holdings II (LCA) . Take Everi Digital (EVRI) for instance. The company is seen more as a picks-and-shovels play on the gambling market supplying gaming machines, self-service loyalty kiosks, and ATMs for casinos, but investors may be overlooking Everi Digital. And while I like the FinTech business as well as the traditional hardware business, it is Everi's continued revenue expansion I find intriguing.
Everi Digital, the online gaming division of EVRI, teamed up with ROAR Digital, a joint venture of MGM Resorts (MGM) and GVC Holdings, to launch some of its most popular three-reel mechanical games in an online format on Borgata Online Casino, BetMGM, and Party Casino New Jersey. While MGM may not quite be up to the Golden Nugget name associated with Lancadia, it remains a strong brand. Plus, gaining access to New Jersey for iGaming is a huge potential catalyst moving forward. It is one of the largest and most sought after markets in the world and tops in North America.
Additionally, Everi Digital extended an online gaming partnership with Parx Casino and Parx Online Casino. This relationship entrenches Everi deeper into New Jersey iGaming as well as Pennsylvania. Not content surviving only in the mid-Atlantic region, Everi has pushed north of the border into Canada as well with another partnership.
Despite Covid-19 weighing on Everi's traditional business, it may be a blessing in disguise as it accelerated the company's push into online gaming. I suspect we'll see many of those online gamers remain even as casinos reopen and welcome in-house gamblers.
iGaming is only one long-term growth driver for Everi. The company currently derives the majority of its business in the U.S. and Canada. Expanding its geographic reach will help grow revenue. The company has introduced contactless gaming vouchers and cashless mobile solutions with QuikTicker and Cash Club Wallet. This could also lead to "Digital Neighborhoods" with the potential to evolve the gaming experience and create more loyal users and players.
Shares have strong support around $7.20 on the daily chart. I'd peg $6.70 as the next level to watch. As long as we remain above the 50-day simple moving average (SMA), the bulls remain in charge. We also have bullish crossovers in the Full Stochastics and MACD indicators. The parabolic stop-and-reverse flipped bullish a few days ago, so momentum and trend continue to favor the bulls. While I would prefer to see a close above $7.90, I am going to start a half-position on the long side in shares with a time frame of six months in mind here. I'll add either on a close above $8.20 or a bounce off the $7.20 or $6.70 level.
