Rush Street Interactive ‘Attractive’ Online Gaming Play, Says analyst

Posted on: February 27, 2025, 03:47h. 

Last updated on: February 27, 2025, 03:47h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Stock plunged today despite Q4 earnings beat, rosy guidance
  • Canada, Latin America contribute to bull case

Despite a fourth-quarter results that soundly beat estimates and the lifting of 2025 revenue guidance, shares of Rush Street Interactive (NYSE: RSI) plunged 15.26% today on volume that was more than triple the daily average.

Rush Street Interactive
A Rush Street Interactive advertisement. The stock slumped today, but an analyst remains constructive on the shares. (Image: X)

At least one analyst views today’s price action in the gaming stock as harsh repudiation. In a note to clients, Macquarie’s Chad Beynon pointed out that RSI’s 2024 results, which included a 34% revenue increase, highlight “the strength of RSI’s iGaming-focused strategy.”

While shares rose 206% in 2024 (vs S&P500 23%), we think RSI is still an attractive way to play the expanding Online market given its lower relative exposure to sports hold, niche iGaming following in key markets, and increasingly diversified global presence in Canada and LatAm,” observes Beynon.

He reiterated an “outperform” rating on the stock with a $16 price target, implying upside of 41.9% from today’s closing price of $11.27.

Rush Street Interactive Stock Has Tailwinds

While RSI stock tumbled today, it remains a catalyst-rich story. The operator has been steadily profitable over the past several years – consistency not found with some of its rivals – and its fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 166% year-over-year, beating estimates by 32%.

The company could also support the stock by using the $50 million share repurchase program announced last October. On a Wednesday conference call with analysts, CFO Kyle Sauers said RSI has yet to buy back shares under that plan. That could be a sign the gaming company could use today’s decline to acquire shares at more favorable prices.

With US investors still largely focused on the iGaming and sports wagering industries in this countries, RSI may not yet be garnering adequate credit for its Latin American exposure. That adds to a compelling long-term investment thesis to go along with one of the industry’s cleanest balance sheets.

“North American monthly average users (MAUs) grew 28% year-over-year (YoY) to 205k, the seventh consecutive quarter of accelerating growth, while Latin American MAUs (including Mexico) grew 71% YoY to 348k,” said Beynon. “Domestic average revenue per monthly average user (ARPMAU) was roughly flat at $346 while LatAm ARPMAU grew both QoQ and YoY in constant currency. RSI ended the year with $299m cash, no debt and a $50m repo authorization.”

RSI Issues Strong 2025 Guidance

As is the case with some rivals, Rush Street Interactive modestly increased its 2025 EBITDA and revenue guidance.

“We are initiating full year revenue and adjusted EBITDA guidance for 2025. We currently expect revenue to be between $1.01 billion and $1.08 billion, which represents $1.045 billion at the midpoint, up 13% year-over-year For the full year 2025, we currently expect adjusted EBITDA to be between $115 million and $135 million, which represents $125 million at the midpoint, up 35% year-over-year,” said Sauers on the conference call.

The high and the low ends of those ranges assume that a recently announced value-added tax in Colombia remains in place for the duration of 2025, but those estimates don’t factor in the possibility of tax hikes in other jurisdictions.