Sports betting data provider Genius Sports (NYSE:GENI) is entering the free-to-play (F2P) games arena with…
Posted on: September 10, 2021, 12:15h.
Final up to date on: September 10, 2021, 01:38h.
Todd Shriber Learn Extra
Clearly, there’s one thing about soccer season and its impression on sports activities wagering equities. Genius Sports activities (NYSE:GENI) inventory is flirting with a achieve of eight p.c this week and is larger by 21.6 p.c over the previous month.
Genius Sports activities CEO Mark Locke in a CNBC interview, seen above. An analyst sees rather more upside coming for the shares. (Picture: CNBC)
That torrid tempo isn’t stopping some analysts from waxing bullish on the sports activities betting information supplier. In a brand new notice to shoppers, B. Riley analyst David Bain resumes protection of Genius with a “purchase” score and a $32 value goal. That suggests upside of greater than 39 p.c from present ranges.
GENI’s established and augmenting market place captures seen, steady, ahead on-line sports activities e-book (OSB) complete addressable market (TAM) will increase, in addition to rising OSB advertising and marketing spend (a second important TAM feed),” says Bain.
“Whereas we worth GENI equally to different B2B on-line gaming corporations, we consider GENI’s deep expertise and on-line, operational integration with the sports activities trade might finally unleash valuation multiples akin to SaaS corporations, providing important potential upside to our value goal,” Bain continued.
“SaaS” refers to software program as a service, vernacular that’s commonplace within the expertise sector, indicating that a technique of deciphering the above feedback is that Genius needs to be valued extra on par with a cloud computing firm and fewer as a sports activities betting enterprise.
Genius Inventory Improbable Soccer Play
Genius Sports activities turned a freestanding public agency in April following a merger with a particular objective acquisition firm (SPAC). Its seasonal tendencies as they associated to the sports activities calendar haven’t been examined over a number of years.
Nevertheless, it’s clear Genius inventory is attentive to the beginning of soccer season, which is smart as a result of that’s probably the most wagered-on sport within the US. This week, the corporate inked offers with a number of sportsbook operators to offer advertising and marketing expertise and assist.
Genius doesn’t function as a consumer-facing sportsbook. Moderately, sportsbook operators purchase information from the corporate and its rivals. It’s anticipated these purchases will improve over time, as regulated sports activities betting and in-game wagering improve in recognition within the US. As Bain notes, that could possibly be a long-term constructive for Genius inventory.
“OSBs require an in depth, steady provide of betting content material, positioning real-time sports activities information because the nucleus of the sports activities betting ecosystem, in our view,” mentioned the analyst. “Showcasing the significance of dependable, high-accuracy, real-time information, near 80% of European OSB wagers are in-game bets. We estimate US in-game betting already accounts for near 30% of wagers, and these wagers ought to eclipse 50% of the entire by 2023.”
Extra Avenues for Genius Upside
Whereas the funding group primarily views Genius as a knowledge supplier, the corporate has different levers to tug to diversify its income stream.
“GENI’s Media Tech division possesses distinctive and generally proprietary entry to sports activities information, stay odds, and a number of media shops/web sites for warmth mapping and analytics—all of which permit for extra focused, efficient advertising and marketing choices for OSBs,” provides Bain. “Already, GENI has greater than 100 media and promoting clients, together with from giant OSBs, equivalent to FanDuel.”
With $275 million in money and no long-term debt, Genius gives buyers a strong steadiness sheet and suppleness when it comes to potential consolidation exercise sooner or later.
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