Posted on: December 31, 2020, 10:54h.
Last updated on: December 31, 2020, 10:54h.
Following its merger with special purpose acquisition company (SPAC) dMY Technology Group Inc., Rush Street Interactive (NYSE:RSI) launched as a public company yesterday and quickly garnered some analyst adulation.
Benchmark analyst Mike Hickey, who was covering the online gaming operator while it was trading under the dMY banner, reiterated a “buy” rating on the new stock while lifting his price forecast on the name to $30 from $21. That new target implies upside of more than 44 percent from RSI stock closed on its first day of trading. It’s well above the highest print for dMY Technology shares, which was $25.40 notched earlier this month.
Rush Street has been able to maintain a market leadership position in November for online casino and deliver sequential growth in online sports betting in Pennsylvania and Illinois despite ‘aggressive competition,’” said Hickey in a note to clients.
RSI is the online gaming unit of Chicago-based Rush Street Gaming, the operator of four casinos under the Rivers brand. The internet casinos and sports wagering firm currently does business in New Jersey, Colorado, Pennsylvania, Indiana, Illinois, Iowa.
All About Access
As the iGaming and sports betting investment thesis gained considerable momentum in 2020, one thing became abundantly clear: Analysts and investors are comfortable wagering that more states are going to approve one or both of those activities.
Results from Election Day only fortify that notion as every gambling-related ballot initiative that was put to voters was passed, including sports betting proposals in Louisiana, Maryland and South Dakota. The more states that join the party, the more opportunities there are for companies like Rush Street to forge into new markets and facilitate top line growth in the process.
As for RSI’s market access outlook, in addition to the aforementioned states, the company said earlier this month it’s partnering with Century Casinos to bring its BetRivers brand to West Virginia. The operator also has a skin in New York, indicating that if the Empire State approves iGaming or mobile sports wagering, RSI stock could surge.
Hickey, the Benchmark analyst, expects Michigan will be live with both online casinos and sports betting in early 2021. On Tuesday, RSI said Iowa residents will be eligible for remote registration on BetRivers.com starting Jan. 1.
Sizing Up the Comps
While DraftKings (NASDAQ:DKNG), which debuted as a public company last April, is seemingly the gauge by which all new online gaming companies are measured, the more reasonable comparison for RSI is probably Tilman Fertitta’s Golden Nugget Online Gaming (NASDAQ:GNOG).
Both RSI and GNOG were born out of SPAC transactions and both became freestanding public companies on Dec. 30.
The operators compete in several of the same markets and each has something to pique investors’ interest. For example, Rush Street Interactive came to market with $240 million in cash on its balance sheet while GNOG has long been profitable, a rarity among emerging internet gaming firms.