While the COVID-19 pandemic significantly disrupted businesses across multiple industries, the online sports betting (OSB) and gaming sector witnessed strong volumes amid stay-at-home orders and a rise in e-sport events. Though the COVID-led restrictions have eased, the online gaming industry continues to see pent-up demand, suggesting that there’s further growth on the horizon for the online gaming companies.
Thanks to the secular industry trends, Rush Street Interactive (RSI), a leading online casino and sports betting company, again delivered impressive quarterly numbers and raised its full-year revenue outlook.
Rush Street Interactive’s Q2 revenues jumped 89% year-over-year to $122.8 million and surpassed the Street’s estimates of $111.9 million. Stellar growth in its monthly active user base, favorable industry trends, and higher average revenue per active user can be attributed to the quarterly beat. Besides for solid revenues, the company reported a narrower than expected loss of $0.04 a share, which is encouraging.
Citing growth in the existing and new markets and higher marketing spend, Rush Street Interactive raised its full-year revenue outlook. Rush Street expects to report revenues in the range of $465 to $495 million, up from its earlier forecast of $440 to $480 million.
Despite strong financial performance and an upbeat outlook, Rush Street stock is trading in the red and is down about 36% this year. (See Rush Street Interactive stock charts on TipRanks)
Nevertheless, Bernie McTernan of Needham remains upbeat on Rush Street stock. The analyst is hopeful about iGaming legislation in 2022, and expects more states in the U.S. to legalize iGaming.
Highlighting Rush Street’s partnership with the CT (Connecticut) lottery to launch OSB and iGaming, increased guidance, and higher marketing spend, McTernan raised his 2021 and 2022 revenue outlook by 4%.
The analyst maintains a Buy rating on Rush Street Interactive stock with a price target of $20 (44.7% upside potential).
McTernan expects Rush Street Interactive to capitalize on the “positive momentum by entering new markets in the US as legislation passes to unlock new states.” He added that the “iGaming market has shown the potential to be meaningfully larger than the OSB market and RSI is an iGaming-first operator.”
On TipRanks, RSI stock has a Moderate Buy consensus rating, based on 2 Buys and 1 Holds. The average Rush Street Interactive price target of $19 implies 37.5% upside potential to current levels.
Disclosure: Amit Singh held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
