Is EBET, Inc. overvalued or undervalued?

As of 9 February 2022, the valuation grade for EBET, Inc. moved from does not qualify to risky, indicating a significant shift in its perceived investment quality. The company is currently considered overvalued, given its negative P/E ratio of -0.0004 and an EV to EBITDA ratio of -2.98, which are starkly unfavorable compared to peers. Notably, Red Violet, Inc. is classified as very expensive with a P/E ratio of 77.67, while Bandwidth, Inc. also carries a risky valuation with a P/E of -33.99.
The financial ratios suggest that EBET, Inc. is not only struggling with negative capital employed but also has a troubling return on equity (ROE) due to negative book value. Despite a recent surge in stock performance, with a 1-month return of 650% compared to the S&P 500's 3.83%, the long-term outlook remains bleak, as evidenced by a staggering 97.98% decline over the past year. This combination of factors reinforces the conclusion that EBET, Inc. is overvalued in the current market context.