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With the New Year upon us, many investors will be re-evaluating their strategies.
It’s fair to say that the trading landscape looks very different now than it did 12 months ago. As 2021 began, we found ourselves at the end of a very powerful bull run that more than offset the near-universal sell-off we saw in Q1 of 2020. Things had already been hectic for most investors, but little did they know just how much crazier things were about to come.
The rise of meme stocks began shortly after the New Year, driven firstly by Reddit users buying up shares of GameStop and performing a short squeeze on hedge funds who had been betting that the company would eventually fold. This then spilled over into other areas, with these retail investors plowing cash into other heavily shorted stocks like AMC.
A boom in cryptocurrencies soon followed, with investors getting excited about “meme coins” like Dodge and then Shiba Inu. At the same time, the acronym “NFT” entered common parlance as a new craze surrounding digital artwork and other assets exploded.
After almost two years where almost every rule and norm of investing has been broken, it’s incredibly difficult to accurately predict what might happen next, especially as central banks now look like they’re going to be taking swift action to combat rising inflation.
That said, some industries continue to show signs of promise that investors may want to consider when they make decisions about their portfolios in the coming weeks and months. For example, travel companies have suffered big hits to their share prices in the last few weeks due to short-term concerns, despite their long-term prospects not changing significantly. Similarly, electric car manufacturers continue to grow in value as more and more investors switch on to the importance of plug-in vehicles.
Another industry that is worth examining is iGaming. It is a sector that has only been around for about 25 years but has grown rapidly and shows potential to continue growing.
A Tale of Two Continents
The iGaming industry looks very different on either side of the Atlantic. In North America, the sector is just a few years old, with many forms of online wagering only permitted within the last 24-36 months.
After the United States’ Supreme Court lifted a law that prevented sports betting companies operating in most states, there has been a frantic rush to build market share. This is easy to see by simply looking at the ever-growing list of free bets and other promotions that are being offered to new customers. While there was just a handful of options a year or two ago, Americans can now select from dozens.
There is a long way to go for the American iGaming industry. Around half of the states are yet to permit online wagering on their territory and some states only opened up the market a few months ago. Even in states like Pennsylvania, where iGaming has been possible for several years, revenues and profits keep trending upwards.
In Europe, the market is more mature. iGaming companies have been able to operate for over two decades and a stable set of regulatory frameworks have been formed across the continent. That said, there is still a lot of room for growth, especially as new bettors take up the hobby and existing ones make the switch to doing it online.
Mergers and Acquisitions
The future prospects of the industry will also be affected by the ongoing trend for mergers and acquisitions. These transactions can have a significant effect on growth prospects provided they are done right. This is why many of the biggest operators have merged or acquired their former rivals in the last few years as they attempt to find efficiencies and put their cash reserves to good use.
On top of that, companies that got a head start in the US market are attractive to those that may not have been as quick out the blocks, creating even more incentive for M&As to continue. Profit margins are already high in the industry, but they’re compressed by competition. More M&As could help to open the release valve on this pressure since there would be fewer companies to share customers between.
Of course, as with all investment decisions you should conduct further research and seek financial advice before making any commitments. The iGaming industry won’t be a good match for every investor, but it is certainly one worth considering as we head into 2022.
