UPDATE: Rush Street Interactive (NYSE: RSI) has just reported a staggering 22% surge in its stock following a robust second-quarter earnings announcement. The online casino and sports betting firm saw its shares skyrocket by nearly 22% in just five days, marking a significant win for the company and the industry as a whole.
The implications of this performance are profound, especially as major competitors like PENN Entertainment (NASDAQ: PENN) prepare to release their own quarterly results on August 7, 2023. Investors are eager to see if PENN can replicate Rush Street’s momentum or chart a distinct growth path with its hybrid land-based and digital strategies.
Rush Street’s latest earnings report reveals a 22% year-over-year revenue growth, reaching record levels, while its EBITDA surged an impressive 88%. Key drivers behind this success include a 25% increase in revenue from the online casino segment and a 15% rise in sports betting operations. The firm also reported a 30% increase in monthly active users (MAUs) in North America and a remarkable 40% surge in Latin America.
Notably, Rush Street maintains a debt-free status while bolstering its cash reserves to $241 million. The company has raised its full-year guidance, forecasting revenue and EBITDA growth of 16% and 51%, respectively. Analysts are overwhelmingly optimistic, with eight out of ten rating RSI a Buy.
Meanwhile, PENN Entertainment, smaller in size yet aggressively expanding, is developing multiple growth projects, including a $200 million land-based casino in Iowa. The company is also enhancing its online presence following the acquisition of theScore and pivoting away from Barstool Sportsbook. Its partnership with ESPN for ESPN BET further intensifies scrutiny on its upcoming earnings report.
Investors hope PENN will reveal progress in its ongoing projects and improve both top- and bottom-line performance. Despite previous earnings volatility, the company’s liquidity remains strong, and analysts maintain a positive outlook, with 11 out of 19 designating PENN as a Buy, suggesting a 33% upside potential.
As Rush Street’s Q2 performance sets a high bar, the industry watches closely to see if PENN can keep pace. The recent earnings miss by competitor DraftKings (NASDAQ: DKNG), which reported an EPS of 38 cents against expectations of 41 cents, raises questions about overall market performance. If PENN fails to deliver, it may reinforce the notion that Rush Street is an outlier rather than a trendsetter.
With investor confidence in mid-tier digital gaming firms at stake, Rush Street’s breakout quarter could symbolize a turning point for the industry. As the market anticipates PENN’s earnings, the pressure mounts for clear strategic gains in an ever-evolving landscape. This is a developing story that investors won’t want to miss.