Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Rush Street Interactive (NYSE: RSI) and the best and worst performers in the gaming solutions industry.
Gaming solution companies operate in a dynamic and evolving market, and the digital transformation of the gaming industry presents significant opportunities for innovation and growth, whether it be immersive slot machine terminals or mobile sports betting. However, the gaming solution industry is not without its challenges. Regulatory compliance is a crucial consideration as companies must navigate a complex and often fragmented regulatory landscape across different jurisdictions. Changes in regulations can impact product offerings, operational practices, and market access, requiring companies to maintain flexibility and adaptability in their business strategies. Additionally, the competitive nature of the industry necessitates continuous investment in research and development to stay ahead of competitors and meet evolving consumer demands.
The 7 gaming solutions stocks we track reported a mixed Q4. As a group, revenues beat analysts’ consensus estimates by 1.5%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 16.8% since the latest earnings results.
Best Q4: Rush Street Interactive (NYSE: RSI)
Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE: RSI) is an operator of digital gaming platforms.
Rush Street Interactive reported revenues of $254.2 million, up 31.1% year on year. This print exceeded analysts’ expectations by 3.4%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ EBITDA estimates.
Richard Schwartz, Chief Executive Officer of RSI, said, “We are excited to report another quarter of record performance, including for both revenue and adjusted EBITDA. Our fourth quarter revenue grew by 31% year-over-year, and adjusted EBITDA increased over two and a half times from the same period last year. We experienced broad-based growth and success across all our geographies and products. We continued to accelerate player growth, acquiring more players efficiently while maintaining industry leading player values. Our commitment to focusing on player needs and leveraging cutting-edge technology to deliver a world-class user experience continues to drive significant growth and profitability.
Rush Street Interactive pulled off the fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 14.9% since reporting and currently trades at $11.32.
Is now the time to buy Rush Street Interactive? Access our full analysis of the earnings results here, it’s free.
DraftKings (NASDAQ: DKNG)
Getting its start in daily fantasy sports, DraftKings (NASDAQ: DKNG) is a digital sports entertainment and gaming company.
DraftKings reported revenues of $1.39 billion, up 13.2% year on year, falling short of analysts’ expectations by 0.9%. However, the business still had a strong quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.
DraftKings achieved the highest full-year guidance raise among its peers. The company reported 4.8 million users, up 37.1% year on year. The stock is down 25.8% since reporting. It currently trades at $34.47.
Is now the time to buy DraftKings? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: PlayStudios (NASDAQ: MYPS)
Founded by a team of former gaming industry executives, PlayStudios (NASDAQ: MYPS) offers free-to-play digital casino games.
PlayStudios reported revenues of $67.78 million, down 12.1% year on year, falling short of analysts’ expectations by 1.4%. It was a disappointing quarter as it posted a miss of analysts’ daily active users estimates.
PlayStudios delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. The company reported 2.72 million monthly active users, down 19% year on year. As expected, the stock is down 13.2% since the results and currently trades at $1.31.
Read our full analysis of PlayStudios’s results here.
Churchill Downs (NASDAQ: CHDN)
Famous for hosting the Kentucky Derby, Churchill Downs (NASDAQ: CHDN) operates a horse racing, online wagering, and gaming entertainment business in the United States.
Churchill Downs reported revenues of $624.2 million, up 11.2% year on year. This result topped analysts’ expectations by 0.9%. Zooming out, it was a mixed quarter as it also produced a decent beat of analysts’ EBITDA estimates but a miss of analysts’ Horse Racing revenue estimates.
The stock is down 12.7% since reporting and currently trades at $104.39.
Read our full, actionable report on Churchill Downs here, it’s free.
Accel Entertainment (NYSE: ACEL)
Established in Illinois, Accel Entertainment (NYSE: ACEL) is a provider of electronic gaming machines and interactive amusement terminals to bars and entertainment venues.
Accel Entertainment reported revenues of $317.5 million, up 6.9% year on year. This number surpassed analysts’ expectations by 3.7%. Aside from that, it was a mixed quarter as it also logged a decent beat of analysts’ video gaming terminals sold estimates but a miss of analysts’ adjusted operating income estimates.
The stock is down 11.1% since reporting and currently trades at $10.44.
Read our full, actionable report on Accel Entertainment here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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