Rush Street Interactive Rallies After Raising 2021 Guidance

Posted on: March 11, 2021, 11:46h. 

Last updated on: March 11, 2021, 12:29h.

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

Rush Street Interactive (NYSE:RSI) stock is higher by 13 percent in late trading. That puts the online casino operator on pace for one of its best intraday showings since going public last December, as the company smashed fourth-quarter estimates and raised 2021 forecasts.

RSI stock
Rush Street Interactive’s BetRivers Sportsbook at Rivers Casino in Des Plaines, Ill. RSI stock soared today following a bullish 2021 sales forecast. (Image: Associated Press)

After the close of US markets Wednesday, the gaming company reported fourth-quarter revenue of $100 million, up 260 percent on a year-over-year basis. For all of 2020, Rush Street Interactive said sales were $278.5 million, a 337 percent increase from the prior year. The operator went public last December following its merger with special purpose acquisition company (SPAC) dMY Technology Group Inc. The March 10 earnings update was its first following that transaction.

Real-Money Monthly Active Users (MAUs) in the United States for the fourth quarter of 2020 were up 116 percent year-over-year and 22 percent sequentially from the third quarter, with average revenue per MAU (ARPMAU) of $328 during the fourth quarter of 2020,” according to a statement issued by the company.

On a per-share basis, Rush Street Interactive lost one cent in the October through December period. Analysts expected a loss of 32 cents.

Catalysts for Rush Street Interactive Stock

Citing gaming research firm Eilers & Krejcik, RSI said it’s the second-largest US internet casino operator, based on 2020 gross gaming revenue.

Fueling the rally in the shares, management issued 2021 revenue guidance of $420 million to $460 million, up from a prior estimate of $320 million. That revision by RSI arrived just a day after rival DraftKings (NASDAQ:DKNG) forecast a combined $67 billion iGaming and sports wagering market in the US at maturity. Assuming 100 percent legalization, the US internet casino market could eventually be worth $40 billion, according to DraftKings.

“At the midpoint of the range, revenue of $440 million represents 58 percent year-over-year expected revenue growth when compared to $278.5 million of revenues for 2020,” said RSI. “This increase reflects our strong Q4 2020 results and anticipated growth in recently opened and existing markets resulting from increased marketing spend funded with cash on hand.”

The operator concluded 2020 with $255 million in cash on hand, equivalent to 7.4 percent of its market capitalization of $3.44 billion. The Chicago-based company is live with iGaming or sports betting in 10 markets — nine US states and Colombia.

Big Growth Forecasts

RSI offers both internet casino and online/mobile sports betting. But they provided data points that seem to indicate the former will be a larger growth driver.

In an investor presentation, the operator notes iGaming customers spend twice as much time on those platforms as do sports gamblers. RSI adds that GGR attributable to online casino users is more than five times that of sports bettors.

In New Jersey last year, the composition of online gaming revenue was 72.1 percent to 27.1 percent in favor of iGaming over sports betting. The Pennsylvania breakdown is 76.7 percent to 23.3 percent, according to RSI’s investor presentation.