GAMB's Deep Value Pitch Confronts SEO Reality and Guidance Volatility

What happened

A Seeking Alpha article touts Gambling.com Group as a dirt-cheap growth stock trading under 4x FCF, citing its transition to sports data services and management's 2026 guidance for 14% revenue growth. Yet, the DeepValue master report reveals a harsh backdrop: GAMB's stock plunged 64% in 2025 after Google algorithm updates crushed organic traffic, leading to a 13% year-over-year drop in new depositing customers in Q3. EBITDA margins compressed from ~40% to low-30s as the company shifted to costlier paid traffic amid repeated guidance cuts, undermining earlier bullish narratives. While sports-data revenue surged to 24% of sales, it comes with $80 million in fixed earn-out payments through 2026, narrowing the balance-sheet margin of safety. The market now prices GAMB at 6x EV/EBITDA, reflecting deep skepticism about its ability to deliver low-teens growth while navigating structural SEO headwinds and leverage risks.

Implication

GAMB's valuation at 6x EV/EBITDA offers apparent upside but is contingent on management halting further guidance cuts and achieving 14% revenue growth with margin expansion in 2026, a tall order given recent NDC declines and EBITDA misses. The sports-data segment must scale beyond 30% of revenue to offset affiliate stagnation, yet its success is tied to $80 million in earn-outs that could strain cash flow and increase leverage if underperformance occurs. Balance-sheet headroom is thin with net debt to EBITDA at 0.33x and interest coverage of 0.76, raising equity dilution risks if SEO pressures persist or earn-outs come due without sufficient EBITDA growth. In the near term, investors must monitor quarterly NDC trends, margin trajectory, and any guidance revisions to assess whether the value narrative holds or deteriorates further. Position-sizing should be modest, aligning with the DeepValue report's 'POTENTIAL BUY' rating and asymmetric setup, where downside to $4 remains plausible if execution falters.

Thesis delta

The Seeking Alpha article reinforces GAMB's deep value narrative but adds little new information, failing to address the severe SEO headwinds and guidance volatility highlighted in the DeepValue report. This does not materially shift the investment thesis, which already balances cheap valuation against high execution risk, but underscores the need for investors to critically evaluate management's ability to meet reset targets without further setbacks. Any shift would only occur if upcoming quarterly reports confirm stabilization in NDCs and margins, a scenario not yet supported by recent data.