Echelon Top PickScore Media and Gaming Inc. (TSXV:SCR), Speculative Buy, PT $0.90
We are retaining SCR as our Top Pick for Q4 despite its 63.4% return for Q3 and 93.3% YTD. Betting represents a huge market on its own while it is seen as a significant catalyst for user growth and advertising. SCR’s clear focus and early mover strategy support aggressive prospects across all drivers. We recognize the potential for betting to recalibrate Score’s user growth and revenues. SCR’s focus on mobile users and its heavy in-game usage (~70%) provide direct leverage to monetize on sports betting. The NewJersey launch of sports betting represents a key test-bed. With wagering over the last 12 months put at $3.4 billion (U.S.) in the NJ market, a modest 2% share would equate to ~$8 million in revenues for Score Media based on a 6% royalty. Management previously noted that New Jersey has seen ~$2 billion wagered in the last 10 months since betting was allowed with mobile and online betting at 4x in-person betting.