Super Bowl 58 was the most watched Super Bowl and telecast in history. It had an average of 123.4 million viewers across all platforms, which included Paramount Global (NASDAQ: PARA) owned CBS Television Network, CBS Sports, Paramount+, Nickelodeon, Univision, and NFL+. CBS was the big winner, with the largest audience ever for a single network. The growth of legalized sportsbooks also contributed to the viewership, boosting the gaming stocks in the consumer discretionary sector.
Major digital sports betting companies like Flutter Entertainment plc (OTCMKTS: PDYPY) owned FanDuel and DraftKings Inc. (NASDAQ: DKNG) were big winners heading into and after the Super Bowl. FanDuel handled over 14 million Super Bowl bets totaling more than $307 million from 2.5 million active users. DraftKings received over 12.4 million wagers totaling more than $305 million from 2.4 million customers. Here are two laggard sports betting companies that may have benefitted from the Super Bowl.
Rush Street Interactive Inc.
Rush Street Interactive Inc. (NYSE: RSI) operates online casinos and sportsbooks. They market their gambling services through BetRivers.com, PlaySugarHouse.com and RushBet brands. They have a casino operating live in four states, online sports betting live in 15 states in the U.S., and three internationally, including Ontario, Canada, Mexico, and Columbia. Rush Street also operates 8 in-casino sportsbooks, including Rivers Casino in Pittsburgh, Philadelphia, Portsmouth in Virginia, and French Lick Resort in Indiana. The company is ranked in the top 4 of 5 casino and sports betting operators in the United States.
Steady growth
Rush Street reported a Q3 2023 EPS loss of three cents, which beat analyst expectations by four cents. Net loss was $13.4 million compared to $22.7 million in the year-ago period. Adjusted EBITDA was $4.1 million compared to a loss of $12.5 million in the year-ago quarter. Adjusted advertising and promotions expenses fell to $34.1 million, down from $44.7 million in the year-ago period.
Revenues jumped 15% YoY to $170 million, beating analyst estimates by $5.78 million. Average revenue per monthly active user (AMRMAU) rose 8% YoY to $374. The company ended the quarter on September 30, 2023, with $171 million in cash and cash equivalents. The Delaware Lottery selected Rush Street as its exclusive online gaming provider. Check out the sector heatmap on MarketBeat.
CEO commentary
Rush Street Interactive CEO Richard Schwartz commented, "With strong revenue growth and more efficient marketing spend, we are proud to report another quarter of increasing quarterly profitability on an adjusted EBITDA basis as well as our expectation to have positive Adjusted EBITDA for the full year, underscoring our commitment to sustainable growth and profitability. Our focus on innovation and efficiency has elevated our market-leading ROI, enabling us to navigate competitive markets with remarkable success and resilience." The company announced it will release its Q4 2023 earnings report on March 6, 2024, after the close, followed by a conference call at 5:30 p.m. Eastern Time.
Rush Street Interactive analyst ratings and price targets are at MarketBeat. Rush Street's peer and competitor stocks can be found with the MarketBeat stock screener.
Daily ascending triangle
The daily candlestick chart on PENN illustrates an ascending triangle pattern. The ascending trendline formed at $5.11 on January 30, 2024, rising on higher lows. The flat-top upper trendline resistance formed at $5.99 as the RSI approached the apex point. The daily 50-period moving average (MA) is rising at $4.72. The daily relative strength index rose to test the 70-band. Pullback support levels are at $5.47, $4.73, $4.44, $3.78,
PENN Entertainment Inc.
Land-based casino operator PENN Entertainment Inc. (NASDAQ: PENN) rebranded its online sportsbook after parting ways with Barstool Sports. On August 8, 2023, it signed a licensing deal with Walt Disney Cos. (NYSE: DIS), which owned ESPN to create ESPN BET. In the deal, Penn will pay ESPN $1.5 billion in cash over 10 years while granting ESPN $500 million of warrants to buy 31.8 million commons from Penn Gaming. Penn has online sportsbook licenses in 16 states. ESPN+ has over 26 million subscribers, and ESPN Digital was the top sports digital platform in the U.S. in 2023, averaging 110.9 million unique monthly visitors.
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Punched in the gut
On February 15, 2024, PENN reported a Q4 2023 GAAP EPS loss of $2.37, missing estimates by $1.80. Revenues dropped 12% YoY to $1.40 billion, missing consensus estimates of $1.52. Due to the Barstool rebranding, the Interactive segment saw a massive drop as adjusted EBITDA was negative $39.6 million compared to $438.3 million in the year-ago period. The company ended the quarter with total liquidity of $2.1 billion, including $1.1 billion in cash.
ESPN BET pain now for gain later
While its 10 properties achieved their highest Q4 revenues ever, the big drawdown came from its investment in ESPN BET. They expanded the PENN Play database by 1.2 million members, with 90% of the growth coming from ESPN BET customers. It expects to launch ESPN BET at retail locations to create cross-sell opportunities ahead of the 2024 NFL season. It will also rebrand Geektown's sportsbook to ESPN BET in the spring in time for the Detroit NFL draft. PENN acquired from Wynn Resorts Ltd (NASDAQ: WYNN) to acquire WSI US, LLC, for $25 million for the mobile sports wagering license issued by the New York State Gaming Commission. Pending regulatory approval, this will enable ESPN BET to launch in New York in 2024. ESPN BET is expected to reach 46% of the online sports betting population upon the addition of New York and North Carolina.
CEO insights
PENN Entertainment CEO Jay Snowden commented, "In our Interactive segment, ESPN BET attracted significantly more first-time depositors (FTDs) than we anticipated, which drove higher than expected promotional expense."
Snowden added, "Importantly, strong early retention and consistent user acquisition have led to steady month-over-month increases in cash handle as our promotional expense has started to normalize entering 2024. ESPN BET has also attracted the mass market sports fan, highlighting the potential to expand the appeal of sports betting and grow the overall market. "
PENN Entertainment analyst ratings and price targets are at MarketBeat. PENN Entertainment has an 11.68% short interest.
Daily inverse cup and handle breakdown
The daily candlestick chart on PENN indicates an inverted or inverse cup and handle breakdown pattern. The lip line formed at $20.92 on November 2, 2023. PENN rose as high as $27.21, forming a rounding top on December 28, 2023. The cup lip line was retested as support on February 1, 2024, as shares bounced to $23.81 when the handle formed. The cup lip line breakdown triggered the Q4 2023 earnings miss, gapping down to $20.46 and proceeding to sell off towards the $18.35 support. Pullback support levels are at $17.53, $16.91, $15.63 and $14.96.
