Genius Sports Stock Jumps in First Trading Day Following SPAC Merger

Posted on: April 21, 2021, 09:49h. 

Last updated on: June 23, 2021, 01:25h.

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

Sports betting data provider Genius Sports (NYSE:GENI) is soaring on its first day as a freestanding public company. In midday trading, Genius stock is higher by almost seven percent.

Genius Stock
Genius Sports CEO Mark Locke (right) in an interview with CNBC’s David Faber. Genius went public today. (Image: CNBC)

The firm came to market via a merger with special purpose acquisition company (SPAC) dMY Technology Group, Inc. II (NYSE:DMYD) — a transaction valuing the data outfit at $1.5 billion. Genius is the latest business-to-business (B2B) on sports betting for investors to consider.

Genius Sports acquires data from sports events around the world and supplies it to sports betting operators,” according to the company. “Genius Sports provides data on over 240,000 events each year – effectively every hour of every day – and is the official provider for over 150,000 of these events.”

The data provider makes its debut as a public company nearly three weeks after inking an agreement with the NFL rumored to be worth $1 billion.

Prior to the NFL agreement, Genius’s US exposure mainly revolved around deals with Major League Baseball (MLB), the NBA, NCAA, and the PGA Tour. By way of pacts with the English Premier League (EPL), Germany’s Bundesliga, and others, Genius is one of the biggest sports data providers to European betting operators.

Genius De-SPAC Implications

While Genius becomes a standalone publicly traded entity at a time of rapid growth for the US sports betting industry — a trait that could ultimately prove alluring for investors — it also debuts in a calamitous period for blank-check companies and their targets.

Last year, SPACs were the talk of Main Street and Wall Street, providing easy avenues for emerging growth companies to go public. The gaming industry was a big part of that enthusiasm, delivering a slew of blank-check deals, including marquee names such as DraftKings (NASDAQ:DKNG).

However, the going is recently tough for “de-SPAC” entities, including gaming fare, as the stocks are struggling mightily to start 2021.

Prior to Genius coming to market, three of the most recent post-SPAC gaming companies to debut were Golden Nugget Online Gaming (NASDAQ:GNOG), Rush Street Interactive (NYSE:RSI) and Skillz (NYSE:SKLZ). Underscoring how quickly things changed for post-blank check companies, GNOG is the best-performing member of that trio with a year-to-date loss of 31 percent.

Genius Stock Has Positive Traits

Time will tell if Genius follows a similar de-SPAC trajectory as the aforementioned gaming names. But the data provider does have some compelling traits for investors to consider.

Those include “over $145 million in cash and no financial debt on the balance sheet.” The NFL deal is a feather in the company’s cap because analysts are already saying sportsbook operators will likely prefer to use official league data and pay up for the privilege.

Speaking of the NFL, the league has a vested interest in seeing Genius stock appreciate because it owns nearly $450 million worth of shares.