{"id":181983,"date":"2021-08-05T09:33:06","date_gmt":"2021-08-05T16:33:06","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=181983"},"modified":"2021-08-05T10:37:19","modified_gmt":"2021-08-05T17:37:19","slug":"genius-sports-stock-could-see-big-declines-says-noted-short-seller","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/genius-sports-stock-could-see-big-declines-says-noted-short-seller\/","title":{"rendered":"Spruce Point Slams Genius Sports, Predicts Major Stock Downside"},"content":{"rendered":"

Spruce Point Capital Management, a money manager that specializes in short selling, has published a new report in which it skewers sports betting data provider Genius Sports (NYSE:GENI). It says the company could endure margin pressure and significant share price declines.<\/p>\n

\"Genius
Spruce Point Capital founder Ben Axler. His firm issued a scathing report on Genius Sports. (Image: Business Insider<\/em>)<\/figcaption><\/figure>\n

On news of a data sharing agreement with DraftKings (NASDAQ:DKNG) and on a day of broad-based strength among gaming equities, shares of Genius are higher by more than four percent in midday trading. However, those factors aren’t preventing Ben Axler’s Spruce Point from establishing a short position in Genius and taking the newly public company to task.<\/p>\n

In a report titled Mr. Irrelevant\u2026 It Doesn\u2019t Take A Genius<\/em>, the research firm says Genius stock could decline 60 percent to 80 percent, implying prices of $3.25 to $6.50. The data provider is just four months removed from becoming a stand-alone publicly traded<\/a> entity.<\/p>\n

While the market\u2019s current view reflects the growth prospects of the sports betting industry, in reality, we believe Genius is just another intermediary that provides similar data to its competitors, and will likely fail to capitalize on wider industry growth,\u201d said Spruce Point in the report.<\/p><\/blockquote>\n

The money manager goes on to say Genius \u201chas an inferior business model\u201d that puts it at the mercy of the major sports leagues and will lead to crimped margins.<\/p>\n

Spruce Point Sees Bleak Near-Term Outlook<\/h2>\n

Like so many newly public companies, Genius Sports is subject to a lock-up period<\/a> in which insiders cannot sell shares.<\/p>\n

\n

As Spruce Point notes, that restriction ends next week, and a wave of insider selling could be unleashed. Additionally, the NFL, which owns a stake in Genius, could be a seller of the stock as well, potentially creating massive headwinds for the already downtrodden shares this month. Genius is lower by almost 10 percent year-to-date and shed 15.64 percent over the past month.<\/p>\n<\/div>\n

\u201cWe expect significant near-term selling pressure on the share price. We estimate 35 million insider shares will become unlocked next week after a 60-day period following the June 21st<\/sup> equity offering,\u201d said Spruce Point. \u201cThe National Football League warrants are exercisable through next week, and 9.2 million public warrants can be exercised on August 18.\u201d<\/strong><\/p>\n

In April, the NFL and Genius reached a six-year data accord<\/a> in which the league received 22.5 million equity warrants at a penny apiece. At the time, that equity was valued at $446.6 million. While the deal was viewed as a coup for Genius because it beat out rival Sportradar, Spruce Point says arrangements like this have yet to pay off for data providers.<\/p>\n

\u201cGenius pays considerable fees for its sports data rights, ~$120 million per year for the NFL, which have yet to generate substantial profits for Genius or Sportradar, the past owners of the NFL rights who did not find the current price economical,\u201d according to the short seller. \u201c<\/p>\n

The research firm adds Genius management may have overstated the opportunity set by saying its total addressable market is $60 billion. Spruce Point says approximately 30 percent of that figure is pre-game betting, where there’s essentially no need for or value in the data Genius and its competitors provide.<\/p>\n

\u201cAt the end of the day, Genius is an intermediary, or middleman, that provides data from sports leagues to sportsbooks and, as a result, will likely be subject to margin pressure from both sides, as well as potential risk of disintermediation,\u201d said Spruce Point.<\/p>\n

Another Post-SPAC Short Report<\/h2>\n

Genius Sports became a publicly traded firm following a merger with a special purpose acquisition company (SPAC). De-SPACed companies have reputations for struggling relative to firms opting for traditional IPOs.<\/p>\n

Compounding those woes this year in the gaming space is the fact that, including the Spruce Point assault on Genius, at least three de-SPACed operators have been hit with short reports. That ball got rolling when at least three short sellers published bearish research on mobile games provider Skillz (NYSE:SKLZ) earlier this year and it continued in June<\/a> when activist Hindenburg Research accused DraftKings of having ties to money laundering and organized crime.<\/p>\n

Speaking of DraftKings, Spruce Point believes that operator and other consumer-focused firms are better ideas than Genius for investors looking to capitalize on the sports wagering boom. Add to that, the short seller says Genius stock is richly valued.<\/p>\n

\u201cWith a market capitalization of over $3 billion, implying a 2021 revenue multiple of approximately 13x, Spruce Point believes Genius\u2019 valuation is beyond reason. Genius trades at a premium to most of its online gaming industry peers based on 2021E & 2022E revenue multiples, despite having the second- lowest 2022E revenue growth rate,\u201d according to Spruce Point.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Spruce Point Capital Management, a money manager that specializes in short selling, has published a new report in which it skewers sports betting data provider Genius Sports (NYSE:GENI). It says the company could endure margin pressure and significant share price declines. On news of a data sharing agreement with DraftKings (NASDAQ:DKNG) and on a day […]<\/p>\n","protected":false},"author":46,"featured_media":181984,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,16693],"tags":[],"acf":[],"yoast_head":"\nGenius Sports Stock Could See Big Declines, Says Noted Short Seller<\/title>\n<meta name=\"description\" content=\"Spruce Point Capital bearish on Genius Sports stock, says it could decline as much as 80 percent.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/genius-sports-stock-could-see-big-declines-says-noted-short-seller\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Genius Sports Stock Could See Big Declines, Says Noted Short Seller\" \/>\n<meta property=\"og:description\" content=\"Spruce Point Capital bearish on Genius Sports stock, says it could decline as much as 80 percent.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/genius-sports-stock-could-see-big-declines-says-noted-short-seller\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2021-08-05T16:33:06+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-08-05T17:37:19+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/08\/BA.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1136\" \/>\n\t<meta property=\"og:image:height\" content=\"852\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/genius-sports-stock-could-see-big-declines-says-noted-short-seller\/\",\"url\":\"https:\/\/www.casino.org\/news\/genius-sports-stock-could-see-big-declines-says-noted-short-seller\/\",\"name\":\"Genius Sports Stock Could See Big Declines, Says Noted Short Seller\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/genius-sports-stock-could-see-big-declines-says-noted-short-seller\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/genius-sports-stock-could-see-big-declines-says-noted-short-seller\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/08\/BA.jpg\",\"datePublished\":\"2021-08-05T16:33:06+00:00\",\"dateModified\":\"2021-08-05T17:37:19+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Spruce Point Capital bearish on Genius Sports stock, says it could decline as much as 80 percent.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/genius-sports-stock-could-see-big-declines-says-noted-short-seller\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/genius-sports-stock-could-see-big-declines-says-noted-short-seller\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/genius-sports-stock-could-see-big-declines-says-noted-short-seller\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/08\/BA.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/08\/BA.jpg\",\"width\":1136,\"height\":852,\"caption\":\"Spruce Point Capital founder Ben Axler. 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