Stocks’ Details

dMY Technology Group, Inc. II 

Business Combination with Genius Sports Group Limited: dMY Technology Group, Inc. II (NYSE: DMYD) is a special purpose acquisition company, focused on creating a merger or a business combination with one or more businesses. In late October 2020, the company entered into a definitive business combination agreement with Genius Sports Group Limited (GSG), the leading provider of sports data and technology powering the sports, betting, and media ecosystem. The transaction will result in creating a new combined company (NewCo) which will be publicly listed on the New York Stock Exchange, and its ordinary shares and warrants will trade on the NYSE under the symbols "GENI" and "GENI WS", respectively. The Pro forma enterprise value of the merger is ~$1.5 billion, and the combined company is expected to have approximately $150 million of growth capital. The transaction is expected to close in the first quarter of 2021. GSG recently announced the filing of a Registration Statement on Form F-4 in connection with Its proposed business combination.

Overview of GSG: Genius Sports Group Limited is a leading sports data provider mainly involved in collecting official live sports data, and providing that data and mission-critical technology to sportsbooks. The company has strong partnerships with high profile leagues.  GSG recently entered into a definitive agreement to acquire Sportzcast Inc., a leading U.S. manufacturer of sports scoreboard data distribution systems.

Outlook: Looking ahead, GSG expects its business combination with DMYD and its NYSE listing to strengthen its position as a true partner to sports leagues, sportsbooks, and media groups worldwide. GSG expects to generate revenue of approximately $145 million in FY20. Further, it expects its adjusted EBITDA of approximately $14 million. From 2016 to 2020, the company expects its revenue to grow at CAGR of 29%.

Revenue Trend (Source: Company Reports)

Stock Recommendation: The stock of DMYD has provided a return of 74.92% in the past three months. The stock is currently trading close to its 52-weeks’ high price of $17.59. On the technical analysis front, the stock has a support level of ~$15.9 and resistance of ~$17.59. Considering the stock’s steep increase in stock price in the past three months, associated investment risks related to the proposed business combination with Genius Sports Group Limited, GSG’s history of incurring losses and limited trading history, we give an “Avoid” rating to the stock at the closing price of $17.44, up by 6.02% as on 15 January 2021, owing to the update regarding the filing of Registration Statement on Form F-4 in connection with Its proposed business combination.

Rimini Street, Inc. 

Appointed Three New GMs: Rimini Street, Inc. (NASDAQ: RMNI) is a global provider of enterprise software products and services. As on 15 January 2021, market capitalization of the company stood at ~$495.85 million. RMNI recently appointed three new regional general managers (GMs) to drive its plans to accelerate growth across its North American Theater operations and to help achieve the company’s stated goal of $1 billion in annual revenue by 2026. The company has appointed Mr. Emmanuel Richard as the Group Vice President and General Manager of North East Region, Mr. Chris Bahr as the Group Vice President and General Manager of Central and North West Region, and Mr. Stephen Zimmerman as the group Group Vice President and General Manager of South and South West region. The company recently announced that its CEO and CFO are going to meet investors on a one-on-one basis at the A.G.P. Virtual Emerging Growth Technology Conference on February 4, 2021.  

Q3FY20 Result Highlights: For Q3FY20, the company reported revenue of $82.5 million, up 19.3% on the previous corresponding period (pcp). Calculated billings for the quarter stood at $68.3 million, up 33.3% on pcp. As of 30th September 2020, the company had active clients of 2,365, up 16.4% on pcp. The company ended the quarter with cash and cash equivalent of $83.7 million.

Q3FY20 Results (Source: Company Reports)

Outlook: Looking ahead, the company is focused on improving free cash flow and growing GAAP profitability. The company recently raised its full-year revenue guidance to be in the range of $321.5 million to $322.5 million, up from a range of $314 million to $320 million.

Valuation Methodology: Price to Cashflow Multiple Based Relative Valuation (Illustrative)

Price to Cashflow Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Stock Recommendation: Over the last one and three-months period, the stock has provided a return of 34.02% and 103.76%, respectively. The stock recently touched its 52-week high price of $6.88. On the technical analysis front, the stock has a support level of ~$4.41 and resistance of ~$6.6. We have valued the stock using price to cashflow multiple based illustrative relative valuation method and arrived at a target price with a correction of high single-digit (in % terms). Considering the volatility in the stock price in the past few months, low current ratio, current trading levels, and valuation, we give an “Avoid” rating to the stock at the closing price of $6.50, down by 3.99% as on 15 January 2021. 

ACE Convergence Acquisition Corp.

Business Combination with Achronix Semiconductor Corporation: ACE Convergence Acquisition Corp. (NASDAQ: ACEV) is a special purpose acquisition company, focused on identifying and acquiring an emerging leader in the IT infrastructure software/systems and system-on-a-chip markets. The company recently entered into a definitive agreement for a business combination with Achronix Semiconductor Corporation. This will result in creating a combined operating entity which will be named Achronix Semiconductor Corporation and will be listed on NASDAQ under the ticker symbol ACHX. The transaction is expected to close by the end of the first half of 2021.

Overview of Achronix: ACEV is an independent supplier of high-performance FPGAs and eFPGA IP based data acceleration solutions. The business combination with ACEV will help Achronix to capitalize on non-cancellable backlog in excess of $160 million and over $1.1 billion in identified pipeline opportunities driven by Speedster® and Speedcore™ products.

Outlook: For FY20, Achronix expects its revenue to be around $105 million with a gross margin of 79% operating margin of 35%. From 2020 to 2025, Achronix expects its revenue to grow at a CAGR of 20% to 25%.

Historical and Projected Financials (Source: Company Reports)

Stock Recommendation: The stock has provided a return of 12.44% in the past three months. The stock recently touched its 52-weeks’ high price of $11.20. On the technical analysis front, the stock has a support level of ~$10.86 and resistance of ~$11.08. Considering the stock’s current trading level, looming COVID-19 uncertainties, associated investment risks related to the proposed business combination with Achronix, cyclical nature of the semiconductor industry, and net loss incurred by Achronix in FY19, we give an “Avoid” rating to the stock at the closing price of $10.98, down by 2.15% as on 15 January 2021.

Comparative Price Chart (Source: Source: Refinitiv, Thomson Reuters)

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