Banks raise BetMGM guidance on bullish Investor Day forecasts
Entain and MGM pledge to inject $450m into US opportunity in 2021 after JV earns 90% of full-year 2020 revenue in Q1 alone
BetMGM has increased its long-term market share target in the US sports betting and igaming market after a flying start to 2021.
The joint venture (JV) operation between Entain and MGM Resorts recorded Q1 revenue of $163m, which equates to 90% of revenue earned throughout the entirety of full-year 2020.
The figure represents a 430% increase year-on-year and a 114% uptick quarter-on-quarter and management has seen fit to increase its long-term overall US market share goal to 20-25%, up from prior estimates of 15-20%.
As of February 2021, BetMGM earned US market share of 22% across all its active states for both sports betting and igaming.
BetMGM expects to achieve $1bn of net revenue in 2022 alongside a long-term EBITDA margin of 30-35%. To achieve that goal, management has confirmed a further $450m will be invested in the JV during 2021.
CEO Adam Greenblatt said BetMGM’s total addressable market (TAM) in North America had been expanded to $32bn to reflect a strong start to life in new states and the potential for a regulated Canada.
The above guidance was shared with analysts during a corporate investor day presentation introduced by Entain CEO Jette Nygaard-Andersen and MGM Resorts chief Bill Hornbuckle.
BetMGM CEO Adam Greenblatt
“BetMGM is poised to be a national leader and our recipe is powerful as evidenced by our recent growth and momentum, which is sustainable and differentiated,” said Greenblatt.
“There is no path to leadership without participation in all states that matter and secured national market access is therefore essential in fulfilling our long-term leadership ambitions,” he added.
London-based investment banks Numis and Peel Hunt increased their target price for Entain following the investor day presentation.
Peel Hunt analyst Ivor Jones said: “We are doubling down on Entain and increasing our target price to £20 from £18. Yesterday’s presentation increased guidance for eventual North American market size and market share.
“Management may be wrong about both. However, we believe what matters for the share price is the quality of execution in the short term, and the presentation highlighted the strengths which are driving the business,” he added.