Stocks Tracker: Firms on the up following positive Q2s, M&A and CEO appointments

Entain

3 July closing: 1,264p

31 July closing: 1,386p

Peak July closing: 1,386p

A slow start to the month for FTSE 100 giant Entain was soon forgotten by the end of July as its US-facing JV, BetMGM, posted positive EBITDA for the first time ever during Q2. While BetMGM did not disclose its EBITDA for the quarter, it represents a landmark moment for the US operator since the fall of PASPA back in 2018.

Coupled with net revenue of $944m for H1 and a reaffirmed full-year target of between $1.8bn and $2bn in revenue was seemingly music to the market’s ears.

Positive signs also included a 25% increase in same-state state revenue from online operations during the first six months of the year, with same-state CPA rates improving by 8%. BetMGM CEO Adam Greenblat said H2 would be buoyed by “ongoing product improvements [and] tremendous support from shareholders”.

Those shareholders would have had a touch of the Chesire Cat as Entain stock rose from 1,299p on Tuesday 25 July to 1,360p the following day and 1,385p by Thursday 27 July.

The update from BetMGM concluded a busy month that had not necessarily translated into a material share price increase. Entain made waves after parting with an initial £81m for US-facing pricing specialist Angstrom Sports in a deal which could amount to £203m.

The operator is looking to tap into the London-based firm’s data and analytics expertise to “unlock significant opportunities across BetMGM’s US sports betting offering”, according to CEO Jette Nygaard-Andersen.

With the deal being announced on Monday 17 July, Entain’s share price closed out at 1,252p compared to 14 Friday July’s close of 1,272p. The operator caught flack in June after agreeing a deal to acquire Polish market leader STS in a transaction worth £750m, with its stock plummeting from 1,321p to 1,206p.

The smaller decrease following the Angstrom deal will have seen a sigh of relief exhaled. Shareholders are highly focused on US returns, so the BetMGM-boosting aspect of Entain’s latest M&A move may well have abated strategic concerns.

Earlier in the month, Entain shares saw a slight uptick after it was confirmed SIS had paused plans to sanction a reported £200m sale following a strong start to 2023. Entain holds a 23% stake in the supplier and saw its stock tick up from 1,209p to 1,217p on Friday 7 July.

Kindred Group

3 July closing: SEK115.40

31 July closing: SEK126.50

Peak July closing: SEK127.65

As part of an in-house interview in late June, Kindred Group interim CEO Nils Andén said the operator “always comes up big in crunch time”. It was a strong rallying call from the boss after taking up the spot vacated by former CEO Henrik Tjärnström once he left with immediate effect in May.

And while there are plenty of wrinkles to iron out at the Stockholm-listed firm, a strong showing on the Nasdaq in July will have seen Andén sitting a touch more comfortably.

In a month in which the operator was gearing up for the release of its Q2 report, it experienced a steady uptick in its stock before Tuesday 25 July. The launch of its proprietary tech platform in Pennsylvania earlier in the month strengthened its hand in the US after going live in New Jersey with the same tech in May.

The firm has struggled to attain cut through in the US but there are hopes the in-house tech will enhance customer experience to a point that will allow it to differentiate it from rivals in the ‘best of the rest’ category.

A rise from SEK119.70 to SEK123.45 on Friday 14 July came following reports of the operator challenging the exclusive horseracing betting licence held by Norsk Rikstoto in Norway. The legal challenge has been sent to a court in Luxembourg to establish if the Norwegian government failed to open the tender up to other commercial operators, as Kindred claims is required via the country’s Gambling Act.

Results day on Tuesday 25 July saw Kindred return its highest share price of the month at SEK127.65 following a 29% year-on-year (YoY) rise in revenue to £307.3m.

Operations in the Netherlands bolstered the headline figure, but when discounting the market, B2C revenue remained flat at 1%. Kindred returned to the Netherlands in July 2022 and has claimed it is on track to regain its market leader position. EBITDA soared 120% to £55.7m in another metric that caught the market’s eye.

However, the back end of the month saw the group’s stock dip slightly, closing out at SEK126.50. Senior management confirmed there was a freeze on “non-essential” recruitment as to drive costs down moving forwards. Kindred remains engaged in the strategic review of the business, and with a rising stock, could see a potential suitor stump up an increased premium should the market continue to champion the Unibet parent company.

888

3 July closing: 99p

31 July closing: 108p

Peak July closing: 110p

An 11% rise in 888’s share price coinciding with the confirmation of new CEO Per Widerström made July a positive month for the London-listed firm. Former Fortuna Entertainment Group (FEG) boss Widerström will join the operator on 16 October following an “extensive” search process led by interim CEO Lord Mendelsohn.

Mendelsohn will return to his role as executive chair in October, with Widerström charged with accelerating growth at the firm as it taps into the strength of its 888 and William Hill brands.

Widerström’s appointment was well received by the market, with 888’s share price rising from 105p on Monday 24 July to close out at 110p on Tuesday 25 July. The day of Widerström’s appointment coincided with the operator’s peak closing price during July.

The appointment of the former bwin and Gala Coral head brings an end to the search for former CEO Itai Pazner’s replacement after he departed in January.

Before Widerström was unveiled, 888 confirmed it had called off talks with investment vehicle FS Gaming Investments, which included proposals for former GVC (now Entain) CEO Kenny Alexander to become CEO.

888 said the Gambling Commission had raised concerns over Alexander and other key GVC figures’ involvement in the GVC’s historical operations in Turkey. Those concerns were relayed after FS Gaming secured a 6.6% stake in 888, with the group hoping to install ex-GVC execs in senior positions.

Adhering to the advice handed down by the regulator, 888 confirmed to the market it had pulled the plug on talks after the “most basic assurances that addressed concerns were not forthcoming” from FS Gaming in relation to the raised issues.

This news sent the operator’s share price crashing to a monthly low of below 80p on Friday 14 July. However, this was arrested by the following Wednesday, with the firm’s stock recovering to 106p. Eilers & Krejcik Gaming’s Alun Bowden said the gambling stock market was one of the “most consistently disconnected from reality markets that exist” in relation to the dip.

The pull of Alexander, despite the looming HMRC case with Entain, which could result in a nine-figure fine, was seemingly disregarded. With Widerström in situ from October, 888 will be looking to put the incident firmly in the rearview mirror.