RSI is the most undervalued gambling play

The company is Rust Street Interactive. RSI operates the #2 nationwide online casino in the nation, as well as the #3 or #4 online sports book in the country. ****The company**** RSI operates https://www.betrivers.com which is an online casino and sports book. They are now fully licensed and operating in: New Jersey, Pennsylvania, Michigan, Illinois, Indiana, Colorado, Iowa, Virginia, and West Virginia. ****The value**** RSI has growth on pace with the king of gambling stocks DKNG. RSI is also guiding for 60% of the revenue of DKNG. Despite the amazing growth and guidance, RSI is trading close to 1/10th the market cap of DKNG. Based on their growth and future guidance, I would expect RSI to be trading closer to 1/2 the market cap of DKNG, or about $13.5 billion. That is 4.3x higher than the current market cap which is at about $3.1 billion market cap. A quick comparison to SKLZ and DKNG below: $SKLZ FY2021 Guidance = $366M w/ a market cap of $6.3B Forward PS = 17.2 $DKNG FY2021 Guidance = $950M w/ market cap $23.6B Forward PS = 24.8 $RSI FY2021 Guidance = $440M w/ Market cap $3.1B Forward PS = 7.0 ****The finanacials**** RSI crushed Q4 earnings and 2020 earnings overall. Here are the highlights. Revenue was $278.5 million during full year 2020, an increase of 337%, compared to $63.7 million during full year 2019. Net loss was $138.8 million during full year 2020, compared to a net loss of $22.5 million during full year 2019. Adjusted EBITDA was $4.4 million during full year 2020, compared to $(7.8) million during full year 2019 According to Eilers and Krejcik, RSI’s U.S. online casino was the second largest online casino operator as measured by GGR for the full year. RSI expects revenues for the full year ending December 31, 2021 to be between $420 and $460 million, up from our previous guidance of $320 million. At the midpoint of the range, revenue of $440 million represents 58% year-over-year expected revenue growth when compared to $278.5 million of revenues for 2020. RSI has submitted applications to have its sportsbook and casino apps available for download in the Google Play Store for Android users in connection with Google’s decision to permit use of real money gaming apps in the United States for the first time. ****Analyst price targets**** Always good to see professionals agreeing with your assessment. Price targets range from $25-$35. Needham and Company LLC started coverage on Rush Street Interactive in a report on Friday, January 22nd. They set a buy rating and a $35.00 price target for the company. B. Riley started coverage on Rush Street Interactive in a report on Thursday, February 25th. They set a buy rating and a $25.00 price target for the company. Oppenheimer started coverage on Rush Street Interactive in a report on Thursday, January 28th. They set an outperform rating and a $25.00 price target for the company. Benchmark restated a buy rating and issued a $30.00 price objective (up from $21.00) on shares of Rush Street Interactive in a report on Wednesday, December 30th. The Goldman Sachs Group from $23.00 to $25.00, The Fly reports ****Disclosure**** Not a financial advisor. Long 35 RSI Dec $15 calls.

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StuartMooney

Apr 18, 2021

31.53%

Change % Since Posting

14.62

Price When Posted

4.61

Change Since Posting

RSI

Rush Street Interactive Inc - Class A

19.23

0.00
0.00%
Current Price

RSI is the most undervalued gambling play

bullish

The company is Rust Street Interactive. RSI operates the #2 nationwide online casino in the nation, as well as the #3 or #4 online sports book in the country.

****The company****

RSI operates https://www.betrivers.com which is an online casino and sports book. They are now fully licensed and operating in:

New Jersey, Pennsylvania, Michigan, Illinois, Indiana, Colorado, Iowa, Virginia, and West Virginia.

****The value****

RSI has growth on pace with the king of gambling stocks DKNG. RSI is also guiding for 60% of the revenue of DKNG. Despite the amazing growth and guidance, RSI is trading close to 1/10th the market cap of DKNG. Based on their growth and future guidance, I would expect RSI to be trading closer to 1/2 the market cap of DKNG, or about $13.5 billion. That is 4.3x higher than the current market cap which is at about $3.1 billion market cap.

A quick comparison to SKLZ and DKNG below:

$SKLZ FY2021 Guidance = $366M w/ a market cap of $6.3B Forward PS = 17.2

$DKNG FY2021 Guidance = $950M w/ market cap $23.6B Forward PS = 24.8

$RSI FY2021 Guidance = $440M w/ Market cap $3.1B Forward PS = 7.0

****The finanacials****

RSI crushed Q4 earnings and 2020 earnings overall. Here are the highlights.

Revenue was $278.5 million during full year 2020, an increase of 337%, compared to $63.7 million during full year 2019.

Net loss was $138.8 million during full year 2020, compared to a net loss of $22.5 million during full year 2019.

Adjusted EBITDA was $4.4 million during full year 2020, compared to $(7.8) million during full year 2019

According to Eilers and Krejcik, RSI’s U.S. online casino was the second largest online casino operator as measured by GGR for the full year.

RSI expects revenues for the full year ending December 31, 2021 to be between $420 and $460 million, up from our previous guidance of $320 million. At the midpoint of the range, revenue of $440 million represents 58% year-over-year expected revenue growth when compared to $278.5 million of revenues for 2020.

RSI has submitted applications to have its sportsbook and casino apps available for download in the Google Play Store for Android users in connection with Google’s decision to permit use of real money gaming apps in the United States for the first time.

****Analyst price targets****

Always good to see professionals agreeing with your assessment. Price targets range from $25-$35.

Needham and Company LLC started coverage on Rush Street Interactive in a report on Friday, January 22nd. They set a buy rating and a $35.00 price target for the company.

B. Riley started coverage on Rush Street Interactive in a report on Thursday, February 25th. They set a buy rating and a $25.00 price target for the company.

Oppenheimer started coverage on Rush Street Interactive in a report on Thursday, January 28th. They set an outperform rating and a $25.00 price target for the company.

Benchmark restated a buy rating and issued a $30.00 price objective (up from $21.00) on shares of Rush Street Interactive in a report on Wednesday, December 30th.

The Goldman Sachs Group from $23.00 to $25.00, The Fly reports

****Disclosure****

Not a financial advisor. Long 35 RSI Dec $15 calls.

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3 min

16.81

Target Price

1/ 10

Confidence

2-6 Months

Timeframe
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