4/5/2023 0 Comments Rush street interactive stockThe significance of the online casino business is that it is larger than its sports betting segment, and more profitable as well in the markets they operate together. My view is that the online casino is probably the most important area the company needs to focus on going forward, and how it is able to improve its hold on that customer base will determine how the company performs over the next year or so. In my opinion, this is the worst-case scenario Rush Street Interactive faces. Under that scenario, the share price of RSI would continue to drop below its current $4.00 level. This means it would take until 2024 before it achieved that goal, depending on the length of the recession.ĭuring that time gross margins, which have been widening, would probably start contracting. That would put pressure on revenue and earnings, pushing Rush Street's EBITDA positive results further out into the future. This could result in the company's average customer spend dropping significantly. That doesn't mean it can't fall further, only that I think it's not likely to plummet a lot more unless the ongoing recession goes deep into early 2023, which would cause its customers to tighten their wallets. The significance of all that in light of its recent earnings report is the company appears to have found a double bottom at approximately $4.00 per share. It bounced from there to around $6.50 on August 16 and pulled back to its 52-week low on October 13, 2022, before clawing its way back to $4.00 per share. Since November 18, 2021, the share price of the company has been in freefall, finally starting to level off on June 16, 2022, when it found some support at about $4.00 per share. As mentioned earlier, it had a 52-week high of $21.70 and a 52-week low of $3.34, with the low occurring on October 13, 2022. I want to briefly revisit some of the movements of the company's share price over the last year. While there was some underperformance in the reporting period, taking into consideration the macroeconomic environment it's operating in, Rush Street Interactive's quarter wasn't too bad. Its balance sheet remains strong, with unrestricted cash and cash equivalents of $195 million and no debt outstanding. As it enters new markets and focuses on shoring up its online casino business, the company said it expects to boost marketing spend, but not to the level it did in Q4 of 2021 or Q1 2022. On the advertising side, spend was $44.7 million during the reporting period, down slightly from the $45.4 million spent in last year's third quarter. Average revenue per monthly active users (ARPMAU) was $345, up 6 percent from the prior quarter. and Canada, real-money monthly active users increased to 130,000, up 31 percent from the same quarter of 2021. The company believes it can achieve to be EBITDA profitable in the second half of 2023. Adjusted EBITDA in the quarter was $12.5 million, up $300,000 from the $12.2 million loss in the same reporting period last year. Net loss in the reporting period was $22.7 million, up from the $18.9 million net loss year-over-year. Without those headwinds, management noted that it would have been in line with Street expectation. dollar, resulted in an estimated impact of approximately $6 million on earnings. The company noted that higher attrition in its online casino segment, along with the impact of foreign exchange from a higher U.S. In the third quarter, RSI generated $148 million in revenue, up 20 percent from the $122.9 million in revenue it generated in the Q3 of 2021. In this article, we'll look at the major thing the company needs to focus on and why, some of the latest numbers, and how 2023 looks in a tough economic environment. The company has a 52-week high of $21.70 but has fallen off the cliff since then, dropping to a low of $3.34 on October 13, 2022, before slightly rebounding to about $4.00 per share as I write. That's important to take into account, because analysts use the discounted cash flow ("DCF") model to project future earnings, and when taking higher interest rates and contracting margins into account, it points to lower earnings and a decline in free cash flow ("FCD"). ( NYSE: RSI) has been growing revenue over the last year, as the online sports betting market continues to grow, albeit hampered some by economic concerns associated with high inflation and the Federal Reserve's response to getting it under control by raising interest rates.Ĭonsequently, the share price of RSI has been getting crushed in 2022 because of being in what is considered a high-risk, high-growth market sector.
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