Published on: August 16, 2022, 10:35 am.
Last update: August 16, 2022, 11:01 am.
Ebet, formerly Esports Technologies, went on a shopping spree last year that saw it acquire all of Aspire Global’s B2C assets. While the $75.9 million acquisition made sense at the time, it is now hurting the company.
Ebet acquired a group of gaming brands last October that included Karamba, BetTarget and others. Additionally, it acquired Helix eSports and B2B software provider ggCircuit the previous year for approximately $43 million. Now, it will lay off most of its workforce as it looks to overcome financial difficulties.
Although it recently reported earnings of just over $7 million for the first quarter of the year, the acquisitions created a financial strain that is still causing problems. In addition to shedding some of its staff, it will also make other changes to prevent further losses.
I’m looking for solid ground
Ebet has announced that it will have to lay off 54% of its workforce, including direct employees and contractors. At the same time, it plans to significantly reduce its focus on eSports in favor of online gaming in an effort to attract more immediate revenue.
Additionally, the company’s marketing efforts and operations will face cuts. Any “intangible” contracts that cannot produce positive financial results are also on the block.
Despite showing positive earnings for the first quarter of 2022, the long-term outcome of acquisitions is less favorable. The company previously expected to report revenue of $70 million for the year, but that is no longer feasible. However, he did not predict what he expects to do after his internal cuts.
Ebet, which trades on the NASDAQ under the symbol EBET, did not have the success it had expected when it went public last year. It started at $25.35 on April 16th and reached a high point of $33.38 on September 3rd. For the most part, it held a strong position until November 12.
However, it started sliding after that and hasn’t stopped. At the start of the year, EBET traded at $20.56, the highest point since 2022. As of today, shares are trading at just $2.25.
eSports continues to grow globally
Ebet’s exit comes as eSports as an industry continues to grow. It has found traction in the past few years, which has attracted global brands as sponsors and event organizers. Additionally, in the US, it is quickly becoming an accredited sport from the high school to college level, adding to its legitimacy.
NewZoo expects more growth to come. In a recent report, it predicted a compound annual growth rate (CAGR) in viewership of around 7.7% by 2024, with the US, Brazil and India markets gaining significant importance.
This audience accompanies an increase in participation, which helps to attract more money. This in turn also increases participation. As a result, eSports revenue will reach at least $1.6 billion by 2024, according to NewZoo, representing a CAGR of about 11.1 percent. Last year, the figure was about $1.28 billion.
This also leads to an increase in eSports betting. Since most US states have legalized sports betting, they have included eSports. While the market segment is still only a small percentage of the larger sports betting market, it continues to grow. Where the market was worth about $12 billion two years ago, it could reach more than $20 billion in five years.