RSI stock could be rewarded by investors if the deal rumors are true

Rush Street Interactive Inc. New York Stock Exchange: RSI provides and operates online sports betting and iGaming platforms, as well as land-based casino sports betting at retail locations across the United States. The company also provides social gaming, which includes online casinos and sports betting, to social media sites.

Shares have recently surged on speculation of multiple bidders vying to acquire the company. This consumer discretionary sector is said to be exploring a potential sale of the company, and DraftKings Inc. NASDAQ: DKNG has been tossed around as a possible suitor.

Rush Street is building a growing mini-empire

Rush Street has a rare combination of both digital and physical casinos and sportsbooks in operation. They operate under several brands, including BetRivers.com, RushBet and PlaySugarHouse.com. Their land-based casinos currently operate in four states and sports betting is active in 15 US states. The company also has an international footprint that includes Mexico, Columbia and Ontario, Canada.

Is Rush Street for sale?

According to Bloomberg, there is speculation that Rush Street is exploring strategic initiatives, including the possibility of a sale. The rumor caused shares to rise 13% intraday, triggering a halt in stock volatility on March 21, 2024. DraftKings was one of the potential suitors, according to anonymous sources.

The Company reported a strong fourth quarter of 2023

Rush Street reported fiscal fourth-quarter 2024 earnings per share of a cent, beating consensus analysts’ estimates for a loss of 4 cents to 5 cents. Fourth-quarter and full-year net losses were $5.5 million and $60.1 million, respectively. Adjusted EBITDA was $11.5 million in the fourth quarter. Monthly active users (MAU) in the US and Canada increased 7% year over year to 160,000. MAUs in Latin America, including Mexico, increased 33% year over year to 204,000.

The ARPMAU in Latin America was $42. Revenue grew 17.4% year-over-year to $194 million, beating analysts’ expectations of $15.04 million. Full-year 2023 revenue increased 17% to $691 million. Average revenue per monthly active user (ARPMAU) was $345 in Q4 2023 and increased 5% year over year. The company ended the year with $168 million in unrestricted cash.

Rush Street launched an exclusive online casino and sports betting business in Delaware on December 27, 2023.

Bullish guidance for full-year 2024

Rush Street expects full-year 2024 revenues to be between $770 million and $830 million. The midpoint of $800 million represents 16% year-over-year growth from full-year 2023 revenues of $691 million. Full-year 2024 adjusted EBITDA is expected to be between 35 and 45 million dollars. At an average value of $40 million, it represents year-over-year growth of 390% versus adjusted EBITDA of $8.2 million in 2023.

CEO Insights

Rush Street Interactive CEO Rick Schwartz noted that more users in the United States and Canada are driving increased revenues as player values ​​rise. The company achieved the highest year-over-year MAU growth in the last 4 quarters of 7%, balanced between its sportsbook and iCasino. Michigan has seen a strong acceleration in revenues, with the fourth quarter posting the highest growth rate in the past year. New Jersey is seeing solid progress reaching new revenue highs since rebranding BetRivers in the third quarter of 2022. Ontario, Canada, is generating 50% year-over-year growth. West Virginia saw year-over-year growth of 80%. Delaware has only been live for 2 months, but has already generated a run rate of $60 million during its first 60 days.

North American Legislative Outlook

Schwartz commented on the North American legislative outlook: “While we are not postponing legislative outcomes, some of the states we are looking at include New York, Maryland, Illinois, as well as the provinces of Canada, particularly Alberta. Looking forward , these, combined with the exciting growth initiatives I mentioned regarding Latin America, make us very excited about the future. There is no shortage of short- and long-term opportunities in our universe.” Schwartz believes casino expansion is a matter of when, not if. Considering the advantageous economic aspects for public budgets compared to the inflows deriving from online sports betting. Check the heat map of the sector on MarketBeat.

Rush Street Interactive analyst ratings and price targets I’m on MarketBeat. Rush Street Interactive peers and competitor actions can be found with MarketBeat Stock Screener.

Daily ascending triangle pattern

The daily candlestick chart for the RSI illustrates the ascending triangle pattern. The ascending trend line formed at $4.99 on January 23, 2024. The flat upper trend line resistance formed at $5.97. The RSI initially attempted to break out on the release of Q4 2023 earnings, when shares rose as high as $7.31, before settling back into the triangle range around $5.67. The breakout occurred again with a rally to $5.97, which gained momentum on rumors of a potential sale to DKNG. The daily relative strength index (RSI) is rising towards the 70 band. The pullback support levels are at $5.97, $5.47, $4.99, and $4.46.

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