Month-to-month Inventory Watch: Sports activities Betting Shares Rally From 2022 Lows


After enduring an extended, painful slide, there are indications {that a} host of beaten-down sports activities betting shares could have lastly hit backside — and are poised for a rebound.

A number of the prime trade names, lots of which maintained market capitalizations in extra of $20 billion a yr in the past, confirmed indicators of restoration in July. DraftKings, which dipped beneath $10 a share in Might, surged greater than 15% in July, producing solely its third constructive month during the last yr. Over that span, DraftKings’ inventory plunged greater than 70%, wiping billions of {dollars} from its market cap. Two conventional Las Vegas powers, MGM Resorts and Caesars Leisure, additionally moved greater in July, every gaining greater than 14% for the month.

Sports activities betting shares have endured a horrendous 10-month interval, battered by the mix of runaway inflation and skepticism that prime firms can ship long-term profitability. The projected time-frame for when the businesses will break even has served as a serious matter of dialogue on 2022 second-quarter earnings calls. Each Caesars and BetMGM misplaced greater than $65 million on the quarter from on-line gaming, giving gas to detractors who argue that digital sports activities betting is just too pricey.

Main sportsbook operators are regularly trying to find methods to amass and retain clients with out breaking the financial institution. The spending wars hit an inflection level in February, when Caesars Leisure CEO Tom Reeg declared that the economics of attracting new sports activities bettors had develop into unsustainable. Though the prices have come down considerably, the businesses are nonetheless scurrying for tactics to resolve the intricate puzzle.

Usually, advertising prices for prime sportsbook operators drop within the early parts of the second half because of a quiet summer season sports activities calendar. Throughout Caesars’ earnings name on Wednesday, Reeg indicated that he expects advertising efforts to select up once more as the beginning of soccer season nears.

DraftKings (DKNG)

Opening value on July 1: $11.75

Closing value on July 29: $13.73

Month-to-month p.c gained or misplaced: 16.9%

Yr-to-date change: (-50.7%)

Market cap: $7.35 billion (as of Aug. 4)

Gaming equities analysts will obtain additional perception into acquisition traits throughout the trade Friday when DraftKings reviews second-quarter earnings. In keeping with the Zacks consensus estimate, DraftKings is anticipated to submit income of of $438.2 million for the interval, an enormous improve of 47.3% from the identical quarter in 2021.

Analysts are extra centered on the corporate’s earnings metrics, the place DraftKings is anticipated to report a second-quarter lack of $0.87 per share, a decline of 14.5% from final yr’s Q2. In that quarter, DraftKings incurred gross sales and advertising bills of $171 million.

Forward of Friday’s name, DraftKings jumped 9% in Wednesday’s session earlier than reaching $17.15 in pre-market buying and selling on Thursday. It marked DraftKings’ highest stage since April 19. On July 20, Truist Monetary diminished its value goal on DraftKings to $16 a share, whereas Citigroup lowered its goal to $20 earlier within the month. A wider take a look at forecasts from a bunch of analysts, nonetheless, pegs DraftKings’ 12-month value goal round $32.

“If we see the lengthy facet liking DraftKings extra coming into into pre-season exercises and the brand new NFL season, then the lengthy shopping for could spur much more quick masking, which might speed up upward value strikes,” Ihor Dusaniwsky, managing director of Predictive Analytics at S3 Companions LLC, instructed Sports activities Deal with in early July.

Shifting ahead, DraftKings, which maintains a 105,000-square-foot headquarters in Boston’s Again Bay neighborhood, may very well be bolstered by the legalization of sports activities betting in Massachusetts. On Monday, a legislative sports activities betting convention committee reached a consensus on a school carve-out, enabling the legislature to ship a invoice onto Gov. Charlie Baker’s desk.

Flutter Leisure (FLTR.L)

Opening value on July 1: £8,248 pence

Closing value on July 29: £8,228 pence

Month-to-month p.c gained or misplaced: (-0.01%)

Yr-to-date change: £11,750 pence

Market cap: $15.2 billion (as of Aug. 4)

Flutter Leisure, the guardian firm of FanDuel, is scheduled to report 2022 interim outcomes on Aug. 12. Previous to the earnings name, FanDuel introduced a number of management modifications.

On Wednesday, FanDuel promoted Andrew Sneyd to government vp of promoting, two days after the corporate appointed Carolyn Renzin to the place of chief authorized officer. Renzin beforehand served as the corporate’s chief threat and compliance officer and can proceed within the latter place in her expanded position.

“In her time at FanDuel, she has led transformative change for our enterprise in constructing out a regulatory and compliance operate befitting the present and future scale of our firm,” stated Christian Genetski, who serves as president of FanDuel Group. “I’m assured she is the fitting alternative to guide our high-performing authorized staff going ahead.”

There are additionally indications that FanDuel is on the verge of rebranding horse racing community TVG as FanDuel TV, in line with a number of media reviews.

MGM Resorts (MGM)

Opening value on July 1: $28.82

Closing value on July 29: $32.93

Month-to-month p.c gained or misplaced: 14.3%

Yr-to-date change: (-28.8%)

Market cap: $15.1 billion (as of Aug. 4)

In Might, BetMGM maintained a 21% market share in lively U.S. on-line sports activities betting and iGaming markets, MGM Resorts famous on Wednesday’s name. The figures place BetMGM second amongst all firms within the market, in line with MGM Resorts. BetMGM additionally maintains a excessive single-digit market share in Ontario, which went reside with on-line sports activities betting in April.

“It’s a market that’s used to iGaming and sports activities betting,” MGM Resorts CEO Invoice Hornbuckle stated on the decision. “Our entry has been productive, and we’re fairly enthusiastic about the place that finally all goes.”

MGM Resorts posted quarterly income of $3.26 billion, topping analysts’ estimates of $3.04 billion. On the earnings facet, MGM missed analysts’ projections, reporting EPS of $0.03 share. Analysts predicted quarterly per-share estimates of $0.24. MGM nonetheless rose about 2% in Wednesday’s after-hours session.

Different inventory motion

Whereas Caesars elevated income by about 12% over the second quarter to $2.8 billion, the corporate’s web losses widened to $123 million for the three-month interval ended June 30. Caesars reported web revenue of $71 million for a similar interval a yr earlier.

Caesars reported a quarterly lack of $0.57 per share, lacking analysts’ expectations for earnings of $0.17 per share. The losses have been concentrated in Caesars’ digital phase, which incorporates the corporate’s on-line sports activities betting and iGaming divisions. Caesars Digital reported an adjusted EBITDA lack of $69 million for the interval, in contrast with adjusted EBITDA of $2 million for a similar interval in 2021.

Following Tuesday’s earnings launch, shares of Caesars Leisure fell 2% within the after-hours session. Caesars later erased the losses in Wednesday’s session, closing the day at $49.26 a share.

Regardless of the swelling losses from its digital enterprise, Caesars maintains that it continues to rein in advertising spending after pulling a glitzy promoting marketing campaign that includes the Manning brothers and actor J.B. Smoove in February. The corporate is making strides in rising “unaided model consciousness,” permitting it to reduce on advertising spending, in line with Eric Hession, co-president of Caesars’ sports activities and on-line gaming division. Nonetheless, analysts are maintaining a detailed eye on the metrics after Caesars’ digital division racked up $692 million in web losses over the primary half of the yr.

PointsBet reported a complete U.S. web win for the quarter of $74.1 million in Australian {dollars}, an 81% achieve over the earlier yr’s interval. On the Australian Inventory Trade, PointsBet rose almost 15% on the month.

On Thursday’s quarterly earnings name, Penn Nationwide Gaming garnered headlines when it formally rebranded to PENN Leisure. The corporate posted income of $1.63 billion, a rise of 5.3% from final yr’s second quarter. However PENN Leisure additionally reported second-quarter earnings per share of $0.15, lacking analysts’ estimates by $0.35.

“Our new title maintains ties to our legacy whereas higher reflecting our evolution into North America’s main supplier of built-in leisure, sports activities content material and on line casino gaming experiences,” PENN Leisure CEO Jay Snowden stated in a press release.

PENN Leisure remained comparatively flat on Thursday afternoon, buying and selling at $36.50, down 0.25% on the session. The corporate remains to be up almost 9% during the last month.

Amongst sports activities betting knowledge suppliers, Genius jumped 15% to $2.59 a share, whereas Sportradar surged 18% to $9.61. Each world suppliers are nonetheless down greater than 60% from their respective 52-week highs. Genius is scheduled to report second-quarter earnings on Aug. 16, in the future earlier than Sportradar.

The Roundhill Sports activities Betting & iGaming ETF (BETZ), an exchange-traded fund (ETF)  that tracks the highest sports activities betting and iGaming shares within the trade, closed July at $15.66, up about 8.7% on the month. The ETF rallied over the ultimate weeks of the month after slumping to $13.77, an all-time low. BETZ hit a file excessive of $32.65 again in April 2021, reaching a stage that greater than doubled its June 2020 debut.


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