$LNW: a slot machine oligopoly at half Aristocrat's multiple | Zack Buckley

Summary

Zack Buckley makes the case for Light & Wonder (LNW) as a high-quality, recurring-revenue slot machine oligopoly trading at a steep discount to Aristocrat. He argues AI fears are overdone, near-term market-share weakness is game-launch timing, and management can hit its 2028 targets, driving multiple convergence and strong returns. He also discusses capital allocation, the Grover acquisition, the Dragon Train settlement, and briefly notes he sold Dave and Sezzle after their rallies.

• Light & Wonder operates in a three-player slot machine oligopoly with over 70% recurring revenue.
• LNW trades at roughly 7-8x EBITDA versus Aristocrat at about 14x despite growing faster.
• AI fears have hit LNW and Aristocrat even though slot content has limited AI exposure.
• First-half weakness is attributed to game launch timing, with LNW's slate weighted to the second half.
• Management's 2028 $2B EBITDA target is doubted by consensus despite a previously hit three-year guide.
• Capital allocation includes debt paydown, buybacks, and the ~7.5x EBITDA Grover acquisition.
• Dragon Train litigation is settled, and lingering impact is expected to be minimal.
• Zack says LNW is his largest position ever; he sold Dave and Sezzle after their >100% rallies.