Stocks Tracker: November a marmite month for sector amid European/US disparity

Kindred Group

1 November closing: SEK99.26

30 November closing: SEK107.65

Peak November closing: SEK107.65

Kindred faced the wrath of regulation throughout November but came away with an unscathed share price as the Stockholm-listed operator navigated choppy waters throughout Europe.

A strong surge in the first half of the month saw the group’s stock jump from SEK99.26, up from Monday 31 October’s close of SEK96, to peak at SEK105.05 on Friday 11 November. The impressive rise slowed slightly heading into the second half of the month, and before a trio of regulatory headaches presented themselves to the Unibet parent company.

In Norway, the Norwegian Gambling Authority (NGA) reneged on its decision to pause its daily fines against Kindred for its alleged illegal presence in the market. In a long-running battle, Kindred subsidiary Trannel offers its services in Norway, a fact the regulator opposes under regulation in the country.

After previously deciding to pause the daily fine of NOK1.2m (£98,902), the NGA confirmed it would reinstate the measure. However, Kindred noted it was no longer actively targeting Norwegian players and the fine was out of step; a legal challenge that is set to continue. Kindred’s share price dipped from SEK103.70 to SEK100.60 on Monday 21 November following the revelation.

The very next day the firm was then slapped with a SEK10.9m (£860,000) fine in Sweden following an AML investigation into its Spooniker subsidiary, which Kindred said it was “considering a potential appeal” against.

Finally, EGR exclusively revealed Polish operator STS was suing Kindred for allegedly accepting Polish players. STS’ claim is similar to that of the NGA in that Kindred is operating in the market via its Trannel subsidiary. The news initially sent Kindred’s share price on a downward turn before recovering and trending upwards at the end of the month.

DraftKings

1 November closing: $16.60

30 November closing: $15.32

Peak November closing: $16.60

After those heady 2020 days when DraftKings stock was trading above $70 a share, a new reality has been a bitter pill to swallow for the firm. Its 52-week high sits at just $21.19, and its November performance failed to threaten this threshold. It was a difficult month for the Boston-based giant, with poorly received financial results, knockbacks in regulation and a tech disaster all cropping up in November.

Beginning with the group’s Q3 results, despite an impressive 136% year-on-year (YoY) increase in revenue to $502m, haemorrhaging losses spooked the market. DraftKings did note a 17% YoY reduction in net losses for the reporting period, landing at $450.2m, and a 15% YoY decrease in adjusted EBITDA losses to $264.2m.

However, the road to profitability still looks shrouded in uncertainty and the market duly responded, sending DraftKings’ share price down from a prior close of $15.93 to a monthly low of $11.39.

CEO Jason Robins remained upbeat about the operator’s performance, and shortened the adjusted EBITDA guidance figures to a loss of between $780m and $800m in 2022 from a prior guidance figure of between $765m and $835m.

Things got better after a weekend break with the news DraftKings was confirmed as a licensed operator in Ohio, but this wasn’t to last long as voters went to the polls in the US mid-terms on Tuesday 8 November.

All eyes from the sector were on California, as Proposition 26 and 27 went head to head to usher in legalised online sports betting in the state. DraftKings, along with several other firms, had ploughed millions of dollars into advertising campaigns but were ultimately left disappointed.

Proposition 27 received $169.3m in funding from operators but ultimately saw just 16% of voters back the proposal in what was a significant blow. DraftKings share price dipped to $11.59 following the rejection, days after Robins noted the route to profitability would be “based on the visibility […] into expected state launches”.

DraftKings stock suffered another downturn later in the month after a cyberattack saw almost $300,000 in customers funds taken from accounts by hackers. The group’s share price dropped by almost 9% as customers reported the activity. One instance saw hackers attempt to withdraw as much as $19,000 from one user account alone.

Flutter Entertainment

1 November closing: 11,615p

30 November closing: 11,996p

Peak November closing: 11,996p

After a Q2 and Q3 of disappointing stock market performance by Flutter’s lofty standards, the industry giant has continued to gather pace in October and following through into November.

The FTSE 100 firm’s share price is now comfortably back above the 11,000p benchmark which it had occupied at the start of the year, before slipping into the four-figure pence range during Q2 and Q3. November got off to a good start after the Judicial Arbitration and Mediation Services (JAMS) ruled in favour of Flutter concerning the price of an 18.6% stake in FanDuel in its dispute with Fox.

The ruling, which CEO Peter Jackson championed, was seen as a huge win for Flutter. Jackson said: “Today’s ruling vindicates the confidence we had in our position on this matter and provides certainty on what it would cost Fox to buy into this business, should they wish to do so.”

The market responded by sending Flutter’s stock leaping to 11,815p on Monday 7 November from a previous close of 11,510p.

Given the welcome boost from the ruling, the company may well have been looking forward to releasing its Q3 results a few days later, which saw Flutter post a 22% YoY rise in group revenue to £1.8bn. This was coupled with average monthly players jumping by 24%, with sports and gaming revenue both increasing by double digits.

However, expectations failed to solidify, and instead the group’s stock fell from a previous close of 11,785p to 11,465p on Wednesday 9 November. This kickstarted a dip in the firm’s stock market fortunes, with shares bottoming out at 11,200p on Thursday 17 November, days after the Irish government gave the green light to new regulation.

Phoenix-like, Flutter rose into the backend of the month, with its share price edging close to its 52-week high of 12,250p.

Esports Entertainment Group

1 November closing: $0.14

30 November closing: $0.12

Peak November closing: $0.14

November 2022 will be an unforgettable month for Esports Entertainment Group (EEG), although for all the wrong reasons. The Malta-headquartered firm came out the other side of? Halloween into a whirlwind of issues, beginning with the shuttering of its esports betting platform Vie.gg in the US.

The platform was launched to much fanfare in New Jersey, with CEO Grant Johnson holding grand expectations for operations, which ultimately failed to materialise. Vie.gg returned just $590 in revenue in August, with the group taking the decision to shutter the brand on 1 November.

The shuttering continued as EEG’s share price remained below $0.15 throughout the entire month, a far cry from a 52-week high of $5.27.

The operator, which had previously put its esports assets Helix eSports, ggCircuit and Esports Gaming League up for sale, decided to close its UK-facing SportNation and RedZone in mid-November.

EEG acquired the brands’ parent company Argyll Entertainment in July 2020 for $7.8m amid soaring industry share prices and valuations. However, the strategy has fallen short, with EEG electing to pull its brand from the market.

The company said: “It is with regret we announce that after careful deliberation, SportNation will cease trading as a UK sportsbook and online casino from the end of November 2022.

“SportNation is closing for a variety of reasons including the economics of operating a small igaming business in the UK market.”

EEG had previously cited difficulties in the UK market, as well as holding an asset impairment charge on the Argyll business of $7.9m.

A truly difficult November will be one to forget for EEG, with the hope 2023 brings it better luck on the stock market.