Earnings+More - May 6: Weekend Edition #45
May 6: Weekend Edition #45FuboTV, Golden Entertainment Q1s, AGS Q421, Bally and Penn analyst reaction, sector watch - financial trading +MoreGood morning, on today’s agenda:
The listed betting and gaming sector cannot be divorced from the ebbs and flows of the wider market, hence the widespread falls in sector stocks yesterday should be viewed in light of the Nasdaq catching a flat. But as was evidenced this week by the persistent earnings call questions about consumers and what one analyst termed the “macro pick your poison” uncertainties, neither will gaming be immune to any wider economic shocks. The first quarter has been good so far; the outlook for the rest of the year, however, is far more uncertain. This email is still free, though. Click below if you haven’t already: Wagers.com Earning+More podcast #7This week, Scott and Jake discuss the latest earnings news from Caesars Entertainment, the trading statement and call from Flutter Entertainment as well as the news from Monday of MGM Resorts’ offer for LeoVegas. Earnings extra: Keep an eye out on your emails for our afternoon coverage of DraftKings Q1s this afternoon. Bally analyst reactionTough sledding: The analysts at Truist maintained their positive view on Bally’s prospects, despite the Q1 earnings miss and the very little color the management team was able to offer on the Standard General rebuff or the shares Dutch auction.
In the kitchen at parties: On that point, Bally launched OSB operations in Arizona this past Wednesday, is “on track” to launch in New York (the last licensee to do so) before Q2 quarter end and will go live in Ontario in the summer. No picnic at overhanging rock: The UK also remains - at least temporarily - a cloudy picture. The government white paper is due imminently, but as with peers, moves by the company to tighten up its compliance procedures have already had an impact while the company said there was also some impact from the worsening economic situation in the UK.
** Sponsor’s message: Venture capital firm Yolo Investments is home to €551m of equity in more than 70 of the most exciting companies across fintech, gaming and blockchain. It continues to build one of gaming’s most dynamic portfolios as it eyes up seed and A-stage opportunities across the sector. Its dedicated 29-company, €183m AUM gaming fund already houses holdings in fast-growing suppliers and operators, including Kalamba Games, SimWin and ThriveFantasy. Yolo Investments is also on the lookout for LPs as it looks to scale new concepts, including its high roller live casino brand, Bombay Club. Penn analyst reactionDramarama: Truist noted that without any further Portnoy drama, it is clear to see that Penn National has momentum on both the land-based and digital side. They noted that management said it had seen “little recognized slowdown from inflation”. Not buying it: The team at Deutsche Bank remain unconvinced, however, suggesting too much of Penn’s valuation rests on “too much value” being ascribed to a digital business which is “subscale and poses further risk”. Low-end theory: Adding to commentary provided earlier in the week from Red Rock Resorts regarding macro impacts on the low-end segment, DB pointed out there are differing definition of low end from operator to operator.
Golden Entertainment Q1
Break out: CFO Charles Protell said all the group’s key segments and venues in Nevada, Maryland and distributed gaming were up. Its flagship venue the STRAT saw occupancy rates average 90% vs. 67% in 2021 and record revenue and EBITDA. White space: With the group capturing a lot of “super hyper local” custom as part of its Nevada-centric model, CEO Blake Sartini said there could be future growth opportunities in leveraging assets in the state.
Do the REIT thing: Asked about current high valuations for Nevada real estate - “arguably your land is worth around your market cap”, one analyst commented - Sartini said the issue was “top of mind for everyone in the business recently as recent transactions have provided some pretty solid valuation metrics”.
The big picture: Sartini was positive on the macro backdrop, suggesting that as volume spick up, costs are added back in. Protell noted that pre-pandemic, Golden Entertainment has 8,300 employees, and now it was down to 6,000 while the company was producing more revenue and EBITDA.
Fubo TV Q1
Ill communication: The group was refused a sports-betting license in Illinois, CEO David Gandler said the reasons were unclear and the group was in discussions with the Illinois Gaming Board about it.
On socialIf $FUBO needs sports betting to get them to profitability, might be a good time for a new strategy
"Wagering remains an important pillar in our path to profitability and in our strategy to integrate interactivity into our live TV streaming experience" VICI Q1 earnings callAre you experienced? On the call, CFO John Payne said VICI would continue to pursue gaming opportunities wherever possible and that there were “a lot of companies that have noticed what we've done in the experiential space”. This has led the group to explore opportunities outside of gaming:
Earnings in brief
Sector watch - financial tradingMeme generation: “One model of investing is that it is a video game that you play on your phone and the bad guys are short sellers,” said Bloomberg columnist Matt Levine this week. It’s a description which fits the meme stock craze of 2021, a craze which sent the share prices of the likes of Gamestop and AMC sky high. Boys ‘n the ‘hood: A clear beneficiary from those heady days was commission-free trading app Robinhood. Surfing the wave of pandemic-era stock speculation, the app came to epitomize what was viewed as the democratization of the markets. Alongside the reddit thread w/wallstreetbets, it came to symbolize a moment in time. Poison arrow: Yet, even at the height of the frenzy Robinhood and its CEO Vlad Tenev were controversial. The practice of stock lending to high-frequency trading firms was contentious. Meanwhile, day-traders were taking to social media denouncing Robinhood restricting trading on some key meme stocks.
Boom to bust: One year later and Robinhood is dealing with more than just a noisy social-media irritant. In late April the company released its Q1 earnings showing revenues dropping 44% to $299m, well short of estimates.
Losing ground: Robinhood said it was suffering due to the current economic uncertainty which was particularly affecting customers with smaller balances. Yet, strikingly the rest of the trading app sector isn’t suffering to the same - or indeed any - extent.
Burn, baby, burn: A recent Bloomberg podcast linked the memestock craze to the wider currents of society discontent.
One of their contributors came up with the analogy of “financial nihilism,” an extraordinary idea and one which upends most ideas around trading and investing. Previous generations of investors might have pondered ‘where are the customers’ yachts?’ Memestock-ers would rather burn down the marina. NewslinesPink ‘un: Bloomberg reports the Las Vegas Strip sale the company has acknowledged it is pursuing is the Flamingo. The story quotes sources as suggesting Caesars hopes to get over $1bn for the property. However, the story noted that some interested parties have already passed. Reeg told analysts on Tuesday’s earnings call that a sale would be announced in the summer. Poker in Vegas: BetMGM will hold the inaugural BetMGM Poker Championship on June 23-26 at Aria Resort in Las Vegas. Landing strip: Marketing compliance software provider Compliable is partnering with igaming licensing provider Rightlander to combine their services and support operators and affiliates. What we’re readingWhat does a billionaire’s henchman do all day? Musk’s fixer. US horse racing: adapt or die CalendarMay 9: Full House Q1 May 10: GIG, IGT, Everi, Light & Wonder, Wynn Resorts, Inspired, SciPlay Q1s May 11: Raketech, NeoGames, Inspired Q1 call, BetMGM investor day May 12-13: iGaming Next New York 2022 May 12: Genius Sports, Endeavor Q1, NeoGames Q1 call May 13: Codere Online Contact us
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May 5: Bally board nixes Standard General bid
Thursday, May 5, 2022
Earnings extra: Bally Corp, Penn National Gaming Q1, DraftKings completes GNOG acquisition
May 5: Profits in sight, says RSI
Thursday, May 5, 2022
Rush Street Interactive Q1, Playtech trading statement, Kindred's activist investor, VICI Q1 +More.
May 4: Caesars hits half a billion digital losses
Wednesday, May 4, 2022
Caesars Entertainment Q1, Red Rock Resorts Q1, Flutter Entertainment trading update +More.
May 3: MGM: LeoVegas ‘puts us on the map’
Tuesday, May 3, 2022
MGM Resorts international Q1, MGM/LeoVegas analyst reaction, Q1 gaming supplier analyst preview +More
May 2: MGM makes online move with LeoVegas offer
Monday, May 2, 2022
MGM resorts offers $607m for LeoVegas, betting and gaming's earnings week, Gaming and Leisure Partners Q1, MGM Resorts analyst upgrade, startup focus - OneComply +More
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