The market value of online sports betting stocks is on the rise. It is forecast to reach nearly $45 billion by 2021. How is the industry doing? What are the companies making money? Poker truc tuyen Are they becoming overvalued? These are the questions investors should be asking themselves. Let's explore some of the online sports betting stocks currently available for purchase.
Market value of online sports betting stocks has risen from $6 billion in March to nearly $45 billion in 2021
Since its inception in June of 2020, BETZ has grown from a handful of holdings to a portfolio of 42 companies. Of those, 10 make up the majority of the portfolio. The companies represent a range of sectors, and the portfolio is diversified: 54% of the stocks are large-cap, 39% are mid-cap and 16% are small-cap. Australia is represented by 9.7% of the portfolio.
Rush Street Interactive has recently upgraded its guidance and expects sales to reach $480 million by 2021. That's up from its first-quarter guidance of $460 million, representing 72% year-over-year growth. The company has also recently acquired the internet gaming software-as-a-service provider Coolbet for $175 million. Coolbet's business-to-consumer sports betting technology fits in nicely with GAN's, and the company expects to have an integrated offering by the end of the third quarter.
Sports betting stocks have experienced a booming market. Since the Supreme Court lifted federal bans on the industry in 2018, the number of states that have legalized sports betting has increased. New Jersey is currently the largest market in the U.S., while the state of California is poised to be the next big market.
As more states legalize sports betting, competition will become stiffer. New Jersey, for example, accounted for 20 percent of the US sports betting market in March 2021. The state had a $1.3 billion handle during the month of March, more than twice the amount of any other state. The state's handle is expected to decline after 2022 when New York launches online sports betting in the state.
Legalization of sports betting could lead to a nationwide epidemic. In the 1990s, the opioid crisis was associated with the abuse of prescription painkillers such as Oxycontin. Legalizing sports betting may lead to a similar epidemic, but this time, the money is coming from people's wallets.
New Jersey's sports betting industry is expected to be the largest in the United States by 2020. It will soon surpass Nevada in terms of betting volume. Although Nevada has been a leader in the industry for decades, it's recently been hit hard by a series of travel restrictions and casino closures. However, it's expected to bounce back in 2021.
Those that are losing money
The online sports betting sector is experiencing a tough patch right now. The initial euphoria over the potential profits has faded, revealing the underlying weaknesses of the industry. The broader tech sector has seen a similar trend in the past. For instance, DraftKings ($DKNG) is down 26% from its high in March, while Penn National Gaming (PNK) is down 60 percent from its high.
To create the list, we looked at nine stocks and one exchange-traded fund that provide investors access to gains from sports wagering. Those stocks were selected based on two growth metrics: earnings per share and revenue growth. Both are important in determining a company's success. Moreover, ranking companies based on only one growth metric is prone to accounting anomalies, such as tax law changes or restructuring costs. As a result, we excluded companies with quarterly growth rates exceeding 2,500%.
Companies that are becoming overvalued
The growth of online sports betting has created an opportunity for investors to make money in the fast-growing industry. However, many companies have surpassed their intrinsic value, and many are becoming overvalued in the market. One such company is MGM Resorts. Once considered one of the world's largest casino operators, the company has undergone a major transformation with its pivot to sports betting. As a result, its stock is down 47% from its 52-week high.
The rise in sports betting stocks has been accompanied by steep losses for some of the publicly traded companies. DraftKings, a popular online sportsbook, ended the year down more than 23%. Meanwhile, the parent company of FanDuel Sportsbook, Flutter, fell 26% during the same time period. Meanwhile, Penn National Gaming (PENN), which owns 36% of Barstool Sports, has sunk to below $44 after hitting a 52-week high of $142 in March.
A company like DraftKings is another example of a company that is overvalued in the online sports betting market. The reason is that its market cap is high compared to its potential growth. The company also has a high level of competition in a limited niche. Moreover, its shares have no meaningful voting rights. According to a discounted cash flow forecast, DraftKings' shares are valued at $51 per share. Despite these risks, investors should be aware of the company's growth potential.
Sports betting stocks have become increasingly popular in recent years, but this doesn't mean that they are unsuitable for the long term. The best way to invest in these stocks is to find a promising one with the potential to achieve substantial returns. Just keep in mind that you should invest responsibly and limit yourself to one stock.
If you are an investor looking for a great online sports betting stock, there are many factors to consider. First of all, you should pay attention to the company's performance. If its stock is undervalued, you can make a profit by short selling it. Similarly, if you believe its stock price is too high, you can sell it and make a profit.
