Genius Sports Notches Remarkable Rally on Russell 3000 Inclusion

Posted on: June 6, 2022, 03:00h. 

Last updated on: June 6, 2022, 03:17h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

The broader complex of gaming equities posted a decent showing Monday. But Genius Sports (NYSE:GENI) was the obvious standout.

Genius Sports
The Genius Sports trading area at the New York Stock Exchange. The stock soared today on news it’s joining the Russell 3000 Index. (Image: Front Office Sports)

Shares of the sports betting data provider surged almost 17% on volume that was double the daily average. That came on news the previously moribund stock is joining the Russell 3000 Index.

June is the month that the preliminary reconstitution portfolio is communicated to the marketplace. Beginning on June 3, preliminary lists will be communicated to the marketplace and updates will be provided on June 10, 17, and 24. The newly reconstituted indexes will take effect after the market close on June 24,” according to index provider FTSE Russell.

Due to sheer expanse of the Russell 3000, hundreds of stocks are added and removed when the benchmark rebalances. In the upcoming reconfiguration of the index, Genius Sports is one of three gaming equities joining the gauge. Social casino developer Playstudios (NASDAQ:MYPS) and a media company are the other two.

Good News for Marquee Genius Investors

Like other sports wagering equities, Genius is mired in a lengthy slump. The shares are off nearly 82% over the past year.

As recently as last September, the stock traded above $24, but it closed at $3.59 today, confirming it’s under selling pressure. That’s as investors ponder whether Genius and rival Sportsradar (NASDAQ:SRAD) are giving up too much equity to procure deals with professional sports leagues.

Speaking of professional sports leagues, the NFL is likely pleased about Genius joining the Russell 3000. The company is the league’s data provider, and as part of that agreement, the NFL is one of the largest investors in the technology company. In total, the NFL was granted 22.5 million Genius warrants as part of the data accord.

Today’s pop by Genius also brings some relief for Cathie Wood’s ARK Investment Management. By number of shares, the ARK Next Generation ETF (NYSEARCA:ARKW) is the largest owner of Genius stock among exchange-traded funds.

Why It Matters for Genius

Genius Sports closed today with a market capitalization of about $760 million, putting it firmly in small-cap territory, and with a share price below $5, the stock is likely being ignored by many fund managers.

However, those that benchmark to the Russell 3000 will be forced to buy shares of Genius to stay in-line with the index, meaning with its inclusion in the index, Genius stock is going before a wider audience of institutional investors.

In other Russell 3000 news, one gaming name — esports company EBET Inc. (NASDAQ:EBET) — is being removed from the index.