These high-flying stocks have fallen flat as investments.
Shares of online gambling stocks were all the rage in 2020 and 2021 as sports betting spread across the U.S. and growth seemed to be unstoppable. DraftKings (DKNG 4.34%) and Rush Street Interactive (RSI 0.00%) went public with much fanfare, and companies like Penn National (PENN 3.14%) surged on online gambling speculation as well. 솔카지노 안전도메인
But online sports betting and iGaming have been much harder to make money at than investors thought. Looking back, this wasn't a very good business to invest in and there are some things we can learn from these poor-performing stocks.파라오카지노 먹튀검증
The growth at any cost
Online gambling was supposed to be a growth business for everyone involved. In some limited respects, it's lived up to that potential. You can see below that DraftKings revenue has been growing, as has Flutter. Rush Street Interactive grew 19% in the first half of 2022 after going public at the end of 2020. 파라오카지노 안전도메인
Growth is great, but the cost of growth matters, especially with rising interest rates and a down stock market. You can see below that each of these three companies are reporting heavy losses as they grow. This is because they're not only spending money to build out their systems, but because they're spending hundreds of millions of dollars on advertising to attract customers. The idea is that spending on customers will pay off eventually, but that hasn't proven to be the case yet and it's not clear when the payoff will come.
To make the online gambling investment story worse, shares of these stocks trade at a huge premium to competitors on the basis of price-to-cash from operations. You can see below that DraftKings doesn't even show up because it doesn't have positive cash flow, while the cheapest companies are MGM Resorts (MGM 2.51%) and Penn National, which have a large presence in the physical world.
Where to invest in online gambling today
The good news for investors is there's an option for them that isn't all that crazy. MGM Resorts owns half of BetMGM with Entain and is still generating billions in cash flow from existing properties. Any cash from online gambling is a bonus at this point. The same can be said for Caesars Resorts, which owns its own online gambling business along with casinos across the country.
