Published on: October 30, 2024, 05:37h.
Last updated on: October 30, 2024, 05:37h.
Shares of Rush Street Interactive (NYSE: RSI) surged in after-hours trading on Wednesday after the gaming company raised its 2024 earnings guidance and announced a $50 million share buyback plan.
With the release of third-quarter results, BetRivers’ parent company stated that it now anticipates 2024 EBITDA to be between $82 million and $86 million, exceeding previous forecasts.
RSI projects Adjusted EBITDA for the full year ending December 31, 2024 to be between $82 and $86 million, increasing the midpoint by $16 million compared to earlier guidance. At the midpoint of the range, Adjusted EBITDA of $84 million surpasses the $8.2 million recorded in 2023,” an official statement from the online sportsbook operator indicated.
The Chicago-headquartered gaming firm also raised its revenue projection, now expecting annual revenues to range between $900 and $920 million, with a midpoint of $910 million, representing a 32% growth from the previous year.
Rush Street Interactive Enters Buyback Trend
Share repurchases are becoming more common in the gaming industry, and Rush Street Interactive is following suit, as the board of directors recently approved a $50 million buyback plan.
While companies are not obliged to fulfill all buyback programs, if RSI repurchases $50 million of its stock, it would constitute a significant portion of its $2.39 billion market capitalization. This buying activity could also unsettle short sellers, given that short interest in the gaming stock stands at 5.09%, according to Seeking Alpha data.
Amid Rush Street Interactive’s year-to-date gain of 139.64%, one of the best performances in the gaming sector, news of the buyback was announced.
CEO Richard Schwartz stated in a press release, “This move reflects our confidence in the company’s future and our commitment to enhancing shareholder value. Our cash generation and strong balance sheet provide us the opportunity to make this strategic investment.”
Latin America Driving Growth for RSI
Investors looking at iGaming and sports betting stocks such as Rush Street Interactive typically focus on US and to a lesser extent, Ontario, Canada. Latin America often gets overlooked due to the lack of exposure of US-listed gaming equities in that region.
However, RSI does operate in Latin America and data from the third quarter shows its increasing importance in the company’s investment profile.
During this period, RSI saw a 122% increase in monthly active users (MAUs) in Latin America, including the operator’s Mexico presence. Although the average revenue per monthly active user (ARPMAU) declined to $39 from $43, the rise in volume offset this decline.