Online bingo group Stride Gaming (STR:AIM) is entering the fast growing social gaming market via the acquisition of Israel-based InfiApps for $39.2 million, but we remain cautious on the stock given the lack of forecasts.

Kitty Bingo and Lucky Pants Bingo owner Stride floated in May with the intention to accelerate its growth by making acquisitions.

Today’s news sends shares in the £102 million cap 10% higher to 245p, almost double its listing price of 132p.

STRIDE GAMING - Comparison Line Chart (Rebased to first)

InfiApps, whose players are predominantly based in the US, Canada and Australia, specialises in social gaming, which means no real money is gambled. Revenue in the social gaming market in the US alone is forecast to exceed $12.3 billion in 2017.

Stride says the deal is immediately earnings enhancing and gives it scope for significant operational leverage. InfiApps generated pre-tax profit of $3.4 million in 2014.

The acquisition is good news for Stride but we’ve been wary of the stock since it listed because its core bingo market is a very low spend, competitive market with low barriers to entry. The lack of broker forecasts is also a concern.

We wrote a detailed analysis on the company recently, which you can read here.

Issue Date: 31 Jul 2015