Genius Sports Tumbles Despite Encouraging 2023 Outlook

Posted on: March 11, 2022, 09:16h. 

Last updated on: March 11, 2022, 10:28h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Genius Sports (NYSE:GENI) stock is sliding today after the sports betting data provider’s fourth-quarter loss was wider than expected.

Genius Sports
The Genius Sports trading post at the New York Stock Exchange. The stock is slumping today. (Image: Front Office Sports)

In the last three months of 2021, Genius lost 28 cents a share on revenue of $84.01 million. Analysts expected a loss of 22 cents on sales of $80.72 million. The company reiterated previously issued forecasts for 2022 and 2023, but that wasn’t enough to lift the ailing stock.

As part of the Company’s Investor Day, held on January 27th, Genius announced its expectation to generate Group Revenue of approximately $340 million and Group Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $15 million in 2022. In 2023, it expects Group Revenue in the range of $430 to $440 million and Group Adjusted EBITDA of $40 to $50 million,” said Genius in a statement.

Genius provides data in over 150 countries to more than 400 sports organizations, including the NFL, EPL, FIBA, NCAA, NASCAR, AFA, and PGA.

Genius Concerns

A major reason Genius stock is struggling are investors’ concerns regarding the substantial investments it needs to make to retain and expand market share. Today’s EBITDA and revenue forecasts could eventually allay those fears, but that could take time.

Still, the data provider posted some notable segment-level revenue increases last year. Sales at its media and content and sports technology and services divisions more than doubled. That’s while top-line growth at the betting technology services unit surged 60.2 percent year-over-year to $177.2 million.

The last three months of 2021 were a brisk period of dealmaking and product enhancement for Genius.

The company “agreed to transformative sports data and global technology partnership with the Canadian Football League (CFL) to grow fan engagement and extend media reach,” according to the statement. “(We) launched new ‘RomoVision’ technology for CBS broadcasts of the NFL and supported Nickelodeon’s broadcast of the NFL playoffs using Second Spectrum’s player tracking and video augmentation capabilities.”

Genius Has Work to Do

As is the case with so many sports betting equities this year, Genius is being savagely repudiated by investors. Entering today, the shares were down 35 percent year-to-date, and 81.41 percent below the 52-week high.

Investors and some analysts soured on Genius and rival Sportradar (NASDAQ:SRAD) because of concerns the companies are giving up too much to land deals with various sports leagues. The bull case for sports betting data stocks largely centers around the data scarcity mentioned by analysts, as well as the expansion of regulated sports wagering.

The consensus price target on Genius stock is $15.70, or more than triple where the shares currently reside, indicating it’s possible analysts could unveil cuts to their projections.