Buy Alert – ZKIN dives into legal gaming with subsidiary

Markets Second Sight Analysis – 4/7/2021

We normally issue sell alerts however our Second Sight Analysis service is based on dark data, a concept we are developing that looks at a combination of unique fundamental and technical signals for assets. is consulting for the xSigma project and full disclosure, we are long the stock ZKIN who owns the project – so we admit our bias.  Now with that out of the way, we have a strong bull argument for ZKIN to be much higher.  Now that it’s trading in the 7 – 8 range we believe this is a great opportunity to pickup shares for a long ride about 20 and higher.

On the news of the gaming investment, shares originally surged:

  • ZK International Group (NASDAQ:ZKIN) shares up 42.5% premarket on forming a new wholly-owned subsidiary, xSigma Entertainment Limited with the intention of acquiring online gaming assets to increase shareholder value by targeting businesses that are in growth industries and have the ability to grow in scale.
  • The company is evaluating several assets with the focus on Management, Approved Licenses, IP, and Branding.
  • According to Gambling Compliance, an independent research firm, "the U.S. betting market will range between $5.9B-$8.2B by 2024. Morgan Stanley believes the U.S. sports betting market could hit $10B annually by 2025 and topping $100B globally. BofA Securities sees the U.S. market hitting $24B by 2030."

They announced this in a press release:[1]

The formation of, xSigma Entertainment was created to acquire assets that will increase shareholder value by targeting businesses that are in growth industries, that have the ability to grow in scale, and that will allow the Company and its shareholders to realize additional growth alongside its existing core business.  Currently, the Company has engaged in several discussions and negotiations regarding an investment in an online gaming company. The Company is evaluating several assets with the focus on Management, Approved Licenses, IP, and Branding. In addition, the Company is keen to enter the online gaming industry in the US and thus its focus on an investment will be weighted to companies that have access to the US gaming market, which is poised to grow as legalization occurs state by state.

Despite this super positive news, riding on the back of a great token launch for the xSigma platform – the stock slumped.  This is why we believe this is the buy of a lifetime.

Buying ZK at this price is like buying Draftkings at 5$.

The fact is there are very few ways to speculate on the US sports betting market, check out the valuations, The Score, DKNG, PENN, GNOG.

This was today:

“Golden Nugget Online Gaming (GNOG) Gains as Jefferies Starts Coverage with a 'Buy' Rating, PT Implies 100% Upside

Jefferies equity analyst David Katz initiated the coverage of Golden Nugget Online Gaming (NASDAQ: GNOG) with a “Buy” rating and a price target of $28.00 per share, which suggests an upside of over 100% compared to yesterday’s closing price of $13.79.

Katz believes that the magnitude and productivity prospects of the iGaming market have not been fully appreciated by the Street yet.

“The prospective size of the TAM at $30-$40B indicated by operators (and GNOG) corresponds with our $19B legalized estimate and is therefore at least equivalent to sports betting, although this is based on fewer legal states with ~double the wager per capita spending. As well, iGaming bears a greater long-term margin opportunity at maturity than sports betting, given the inherently lower COGS. Our proprietary work supports GNOG's focus on this market and an expected share target of 10% at scale,” Katz says in today’s note issued to clients.”

Full disclosure, we are loading up on ZKIN now, as it was recently above $12.

To learn more about the xSigma project, checkout’s blog or visit LLC develops software for disruptive markets, with a focus on information systems.  Second Sight Analysis provides deep macro analysis on assets.


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