Stocks Tracker: Share prices gyrate as US-facing firms’ fortunes fluctuate
EGR analyses the share price movements of major industry players in February, including DraftKings, Bally’s and Better Collective
DraftKings
1 February closing: $16.48
28 February closing: $19.89
Peak February closing: $20.62
DraftKings edged closer to returning its first-ever positive EBITDA quarter after reducing its losses by 61% year on year (YoY) in Q4 2022 to $50m as the market reacted favourably to the news.
The Boston-headquartered operator returned an 81% YoY leap in revenue to $855m but did see its cost of revenue soar 91% from $253m to $485m.
The firm noted it had delivered positive EBITDA when adjusting for launch costs in Maryland and Ohio, so subsequently adjusted its full-year 2023 guidance.
The revision has seen EBITDA guidance shifted to a loss of between $350m and $450m in 2023, down from a prior range of between $475m and $575m.
The reduction in these losses and the emerging pathway to profitability sent the stock jumping from $17.81 on Thursday 16 February to close out at a monthly high of $20.54 on Friday 17 February.
However, Regulus Partners analyst Paul Leyland warned DraftKings could face a “cost problem” moving forwards.
Leyland said: “As the number two US sportsbook operator, with significantly enhanced igaming capability through the GNOG acquisition, there are reasons to be optimistic.
“However, with net cash falling by 40% over the year, to $1.3bn or 2x FY22 burn rate, and capital markets now unforgiving of supporting operating losses, DraftKings can no longer easily spend its way to growth.”
DraftKings’s stock slipped slightly in the weeks following its results announcement, dipping as low as $18.19, but kept its head above the pre-results level.
Elsewhere, the operator confirmed it had laid off 4% of its global workforce, or around 140 jobs, as part of its reorganisation of the company.
The bulk of the job losses will be in the European, Middle East and African divisions, with some redundancies also in the US.
The news saw the group’s share price rise slightly on Thursday 2 February, with the operator noting a need to refocus on operational efficiencies as the reason behind the cuts.
Bally’s
1 February closing: $20.77
28 February closing: $19.75
Peak February closing: $21.01
While DraftKings eeks closer to turning a profit after years of burning through cash, Bally’s will be feeling the heat as February saw the business report a 300% rise in net losses as part of its full-year 2022 results.
A difficult month for the firm saw the confirmation of the departure of CEO Lee Fenton on Monday 13 February after less than two years in the role.
Fenton became Bally’s CEO following the £2bn merger of Bally’s and Gamesys Group in October 2021. He will remain in the post until 31 March.
Bally’s confirmed its Interactive president, Robeson Reeves, will step up to become CEO.
On the same day, Bally’s also revealed its preliminary full-year results, with net losses rocketing by more than 300% YoY to a negative $476.7m.
Robeson said he would be taking a “deep dive” to the firm’s approach in North America after labelling its online division’s results as “unacceptable”.
Despite these less-than-impressive net losses, revenue rose by 5% and EBITDA jumped by 22%. In turn, the Rhode Island-based operator’s shares rose to close at $19.51 from a previous close of $19.12.
The goodwill given by the market did see Bally’s share price continue to rise throughout the remainder of the month, until its full results were released on Thursday 23 February to compound a downturn in fortunes for the operator.
The net losses were confirmed, due in part to a non-cash impairment charge of $390.7m relating to its North America Interactive segment, primarily the Bet.Works and Monkey Knife Fight acquisitions.
Monkey Knife Fight was shut down yesterday, 28 February, just over two years after Bally’s paid $90m for the DFS startup.
In fact, Robeson took the opportunity on the quarterly results call to question the £125m acquisition of Bet.Works.
Robeson said: “On sports, we recognise that the Bet.Works acquisition did not give us the platform required to develop a competitive product. We didn’t react fast enough there, and this will not happen again.”
Bally’s stock slipped to $19.48 following the release of the results, before sliding even further to close out the week at $18.24.
Better Collective
1 February closing: SEK162.50
28 February closing: SEK188.90
Peak February closing: SEK189.50
February marked a hugely positive month for Better Collective after the affiliate reported a 63% YoY jump in Q4 2022 revenue, an increase that maintained its steady share price rise at the start of the year.
The Danish firm had already preliminarily updated the market on Monday 6 February with its unaudited results. These expectations were then met when the group revealed its full Q4 breakdown on Wednesday 22 February.
The initial update also included the news that Better Collective was expecting to surpass its target of $100m in full-year 2022 revenue in the US. The firm returned $101m in revenue over the 12 months.
The early month update sent Better Collective’s stock soaring from a previous close of SEK170.90 to finish at SEK181.30 as the market lapped up the positive outlook.
A relatively steady rise, bar a couple of dips, saw the stock continue to tick up towards the 22 February full release.
Along with confirming its top- and bottom-line figures, which were driven by the launch of online sports betting in Maryland and an “extraordinary performance” around the World Cup, Better Collective revealed it had splashed the cash too, helping its share price rise once again.
The Stockholm-listed affiliate noted it acquired a “smaller asset deal for a sports media in an emerging market” for $4.3m, with $3m paid upfront.
The group also confirmed it had acquired an 8.5% stake in long-time rival Catena Media, following a brief market update earlier in the month where it was revealed at least a 5% position had been taken.
The strategic moves and strong results sent the Better Collective’s stock rising, closing out at SEK185.70 from a previous close of SEK182.
Shares continued to rise during the final week of the month, closing out at SEK188.90, representing monthly growth of 16.2%.