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Rush Street Updates 1 Key Risk Factor
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Rush Street Updates 1 Key Risk Factor

Shares of online casino and sports betting company, Rush Street Interactive, Inc. (RSI) have declined 50.8% so far this year. RSI’s recent fourth-quarter performance missed the Street’s expectations on both its top-line and bottom-line fronts despite double-digit growth in its top-line.

Revenue jumped 30.5% year-over-year to $130.6 million, but fell short of estimates by $6.33 million. Net loss per share at $0.15 came in wider than estimates by $0.01. During the quarter, RSI generated $327 in average revenue per monthly active user. Additionally, the company saw a 28% year-over-year jump in real-money monthly active users.

RSI’s approach is to balance profitability from existing markets and invest in new market launches. Compared to 6 at the end of 2020, RSI now operates in 14 markets. In H1 2022, RSI plans to expand in Canada and Mexico with its online casino and sportsbook sites and apps.

Looking ahead, for full-year 2022, the company expects to generate revenue between $580 million and $630 million. With these developments in mind, let us take a look at the changes in RSI’s key risk factors that investors should know.

Risk Factors

According to the TipRanks Risk Factors tool, Rush Street’s top risk category is Finance & Corporate, contributing 19 of the total 56 risks identified for the stock.

In its recent report, the company has added one key risk factor under the Finance & Corporate risk category. Compared to a sector average of 14 Finance & Corporate risk factors, RSI has 19.

RSI acknowledged that it has witnessed net losses and negative cash flows from operations since its formation. This experience of losses may continue in the future and there can be no guaranteed profits. As it expands its operations in existing and new markets, RSI expects its operating expenses to increase in the future.

The risk remains that if RSI’s revenue does not grow faster than its expenses, then the company may not be able to achieve or maintain profitability.

Hedge Fund Activity

According to TipRanks data, Wall Street’s top hedge funds have decreased holdings in Rush Street by 900.5 thousand shares in the last quarter, indicating a very negative hedge fund confidence signal in the stock. Chuck Royce’s Royce & Associates has a holding worth ~$2.94 million in RSI.

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