Sportradar Stock Not Getting the Software Respect it Deserves
Posted on: June 20, 2025, 04:47h.
Last updated on: June 20, 2025, 04:47h.
- Sports betting data provider meets software industry “Rule of 40” criteria, but stock isn’t treated as such, says analyst
- Share price doesn’t reflect growth of in-game betting or potential for the biggest states to legalize sports wagering
Shares of Sportradar (NASDAQ: SRAD) are higher by 46.48% year-to-date, making the data provider easily one of the best-performing gaming stocks while perhaps muting the argument it’s not getting much respect.
One analyst sees things somewhat differently. In a new report to clients in which he initiated coverage of the sports betting data giant, Macauarie analyst Chad Beynon said Sportradar meets the software’s industry “Rule of 40” criteria, but the investment community doesn’t treat it as a high-growth software-as-a-service (SaaS) name.
In the software industry, particularly the SaaS space, the Rule of 40 is a financial gauge suggesting that a financially sound, thriving company should have combined revenue growth rate and profit margin of 40% or more. Apparently, Sportradar has cleared that bar, but even with the stock up more than 132% over the past year, it may not be getting credit for being a legitimate Rule of 40 name. Beynon started coverage of it with an “outperform” rating and a $32 price target, implying upside of nearly 26% from today’s close.
Sportradar Stock Not Reflecting Big Opportunities
Although Sportradar stock is on a torrid pace, its current valuation may not be factoring catalysts such as the growth of in-game betting and the possibility that some marquee states will eventually legalize sports wagering.
We don’t think SRAD’s current valuation is reflective of OSB in California (and) Texas nor a US in-play shift above 50% this decade,” observes Beynon. “Our analysis shows these would represent significant upside. Moreover, we don’t think the market expects any international market share gains or penetration in Asia and LATAM.”
The analyst adds that over the near-term, estimates on Sportradar could be boosted as the company integrates IMG Arena into its portfolio — an acquisition the firm is being paid to execute.
Under the terms of the deal, Sportradar lands a consideration of $125 million with seller Endeavor Holdings pledging $100 million in cash prepayments “to certain of the sports rightsholders.” The transaction, which Sportradar announced in conjunction with its fourth-quarter results, is slated to close in the fourth quarter of this year.
Sportradar Duopoly Advantages
As is the case with sportsbook behemoths DraftKings and FanDuel, Sportradar essentially operates as half of a duopoloy with the other half being Genius Sports (NYSE: GENI). In other words, Sportradar has some of the hallmarks of a wide moat company — a trait that could prove advantageous as the firm attempts to capitalize on an expanding total addressable market.
On that note, the bulk of Sportradar’s league rights deals are long-term in nature and not subject to renewal anytime soon, meaning related expenditures should be kept in check. As Beynon points out, less than 40% of global sportsbook gross gaming revenue (GGR) is using official data, implying there’s a significant runway for growth for providers like Genius and Sportradar.
The analyst adds that with the help of NBA in-gaming betting popularity and increased use of artificial intelligence (AI), Sportradar has credible avenues for robust margin expansion — something that would be enhanced if California and Texas approve sports betting.
“Moreover, we estimate that SRAD’s business could achieve margins of 30%+ on its entire business by simply adding sports betting in California and Texas, specifically we think the addition of these two states will add ~500bps+ of margin at maturity,” concludes Beynon.
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