Stocks Tracker: Q4s quash stocks in feeble February for firms
EGR analyses the share price movements of major industry players in the month of February, including Kindred Group, DraftKings and Super Group
DraftKings
1 February closing: $23.32
28 February closing: $22.88
Peak February closing: $23.36
The giddy heights of $70+ a share from last year continue to appear as a fever dream for DraftKings as February 2022 once again delivered a struggle on the Nasdaq for the company.
A steady share price between $21.03 and $23.29 at the low- and high-end for the first few weeks of the month gave the Boston-headquartered firm a sense of stability, albeit on a lower scale than it would have envisioned.
However, the release of its Q4 2021 results sent the share price into a spiral as EBITDA and operational losses continued to mount despite a 47% revenue rise to $473m.
EBITDA losses increased to $127.9m from $87.8m, while operational losses rose to $368.7m from a prior Q4 2020 figure of $268.3m, leading to a sharp decline in the share price on Friday 18 February.
Having closed at $22.82 on Thursday 17 February, DraftKings saw its stock freefall to close at $17.74 on Q4 results day. The respite of President’s Day meant the stock market didn’t open until Tuesday 22 February but to little joy for DraftKings as its share price remained stagnant at $17.87.
The back end of February did offer a share price rise with DraftKings continuing to battle against claims made by New York-based analysis firm Hindenburg Research over the black-market history of DraftKings’ SBTech subsidiary.
On Thursday 24 February, DraftKings launched a rebuke against the claims that suggested investors should offload DraftKings stock.
In light of this move, DraftKings shares actually rose to $20.60 at the close of Thursday 24 February and continued to rise to the end of the month, ending at $22.88 on Monday 28 February.
Kindred Group
1 February closing: SEK110.20
28 February closing: SEK105.25
Peak February closing: SEK110.60
Stockholm-listed Kindred Group emerged relatively unscathed from February having passed two major moments which could have drastically altered the company’s share price.
The first saw Kindred announce its Q4 2021 results which saw the group post a 33% year-on-year (YoY) fall in revenue to £224.9m, down from £364.7m in Q4 2020.
Additionally, Q4 EBITDA fell by 77% to £27.6m as the operator blamed “exceptionally low sportsbook margins” and its departure from the Netherlands as key reasons for the downturn.
On the day, trading did see Kindred’s share price fluctuate, with it dropping by 8% at one point. However, by close of play, shares stood at SEK107 compared to SEK107.5 on Tuesday 8 February.
The second potential sticking point for Kindred’s share price started on Wednesday 16 February after the Norwegian Gambling Authority (NGA) threatened the operator with a £36.2m total coercive fine over its failure to leave the market.
Via its Malta-licensed subsidiary, Trannel International Limited, Kindred offers its services throughout Norway, albeit allegedly illegally according to the country’s gambling authorities.
Kindred stock remained unmoved from Tuesday 15 February close of SEK104.30 to SEK104.20 following the announcement from the NGA.
Later that week, on 18 Friday February, Kindred moved to clarify its position in the market and its reasons why it believes it is not offering its services illegally.
Kindred’s public affairs manager for Norway, Rolf Sims, said that the firm was operating within EEA law and that cross-border services did not break Norwegian gambling regulations.
The response may have spooked the market as Kindred’s share price slipped to SEK103.30 on Friday 18 February from a previous close of SEK108.40.
A low point of the month followed on Monday 21 February with the group’s share price falling to SEK97.38 before recovering slightly throughout the remainder of the month.
Esports Entertainment Group
1 February closing: $3.04
28 February closing: $0.86
Peak February closing: $3.46
Esports Entertainment Group (EEG) saw its share price haemorrhage following the release of the company’s Q2 2022 financial results, falling by more than 50% from the previous day’s close.
The Nasdaq-listed firm revealed a slight YoY uptick in revenue on 23 February to $14.5m but net losses amounting to $34.3m and a cash balance of just $1m sent the share price plummeting.
As a result of the downturn in the reporting period, EEG said it had realigned its full-year revenue expectation to a range of $70m to $75m.
Having closed at $2.97 on Tuesday 22 February, the Malta-headquartered company’s shares crashed to $1.24 on Wednesday 23 February, signalling the start of a rapid descent for the rest of the month.
Investors and EEG could have been forgiven for thinking a close of $1.16 on Friday 25 February would represent rock bottom at the end of a rocky week but the respite of the weekend gave way to another stock price shock when the market reopened on Monday 28 February.
EEG’s share price dipped below the $1 mark to close at $0.86, nearing its 52-week low of $0.70.
EEG has confirmed it has delivered stronger growth in the opening months of 2022, with the group posting seven consecutive weeks of revenue exceeding $1m.
Super Group
1 February closing: $8.65
28 February closing: $8.45
Peak February closing: $8.80
Super Group’s debut month as a publicly listed company following its multi-billion-dollar SPAC merger with Sports Entertainment Acquisition Corp gave the firm a small taste of what they could face in the coming years.
After listing on 28 January, Super Group started February with a share price of $8.65 but murmurs coming out of Sweden in the early part of the month may have contributed to a slight downturn in share price.
The Swedish Gambling Authority reprimanded Super Group’s Betway brand over historical negative equity failings, which Super Group told EGR were no longer of concern following the public listing and strong cash balance.
However, following the reprimand, Super Group’s share price dipped to $8.27 on Thursday 3 February, before rebounding impressively to $8.80 by Monday 7 February.
From this monthly peak, Super Group saw its price steadily decline over the subsequent weeks, bottoming out at $7.48 on Tuesday 22 February ahead of the firm’s preliminary full-year 2021 net gaming revenue (NGR) results.
On Thursday 24 February, Super Group announced it expected to post a 36% YoY rise in NGR to $1.52bn, along with EBITDA to surpass $350m.
These results saw the New York-listed operator post a Friday 25 February close of $8.24, rising to $8.45 on Monday 28 February from a Thursday 24 February close of $7.92.