We came across a bullish thesis on DoubleDown Interactive Co., Ltd. (DDI) on Substack by Kairos Research. In this article, we will summarize the bulls’ thesis on DDI. DoubleDown Interactive Co., Ltd. (DDI)’s share was trading at $9.85 as of April 17th. DDI’s trailing P/E was 3.94 according to Yahoo Finance.
A graph depicting the increasing downloads of the mobile game app.
Double Down Interactive (DDI), a South Korean-based developer originally known as The8Games Co., has evolved into a key player in the social casino and mobile gaming sector. With a strong foundation in casual web-based games, DDI made its mark in 2010 with the launch of DoubleDown Casino, one of the first social casinos that utilizes virtual currency without real-money gambling. Over time, the company has expanded its portfolio with titles like Double Down Classic Slots and Double Down Fort Knox, and most recently acquired SuprNation AB in 2023—its first foray into real-money I-Gaming. This acquisition granted DDI licenses in highly regulated but stable Western European markets, including the UK and Sweden, positioning the company to capitalize on a $25 billion serviceable addressable market in I-Gaming, with potential expansion into other European countries.
Despite impressive monetization improvements, DDI has struggled with investor sentiment due to a $415 million lawsuit settlement, ongoing user decline post-COVID, and FX and cost-related headwinds from SuprNation. The company operates a freemium model and has seen monthly active users drop from 1.7 million in 2021 to 1.4 million, highlighting both post-pandemic normalization and the inherent churn in the mobile app market. Nevertheless, DDI has increased its payer conversion rate from 5.2% in 2019 to 6.7% in 2024 and more than doubled revenue per daily active user over the same period. Compared to larger competitors like Playtika, DDI has proven more efficient in monetizing users, supported by strong data analytics and targeted engagement strategies.
Financially, DDI stands out with a net cash position of $380 million—roughly 78% of its $487 million market cap—and trades at just 3x free cash flow, offering a 32% FCF yield. While management has not historically prioritized buybacks or dividends, they’ve indicated a preference for pursuing accretive acquisitions to drive growth. With the social casino market valued at $7.5 billion and I-Gaming growing rapidly, DDI has multiple paths to expand its reach. Catalysts such as economic downturns (which often boost gambling-related activity), further M&A, and continued margin expansion present significant upside potential. Even with inherent risks—such as regulatory uncertainty, fierce competition, and ongoing user churn—DDI offers a compelling valuation. A base case DCF analysis supports a target price of $21.32 per share, implying significant upside from current levels and positioning DDI as a deeply discounted opportunity with optionality tied to both organic improvements and strategic growth in the I-Gaming sector.
DoubleDown Interactive Co., Ltd. (DDI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 5 hedge fund portfolios held DDI at the end of the fourth quarter which was 4 in the previous quarter. While we acknowledge the risk and potential of DDI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DDI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.