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  • March stock market sweep: Entain and Genius Sports falter 
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March delivered a mixed bag on the stock market front. While Entain’s share decline wasn’t entirely unexpected, Genius Sports took a hit despite beating FY 2023 expectations.

Entain

Troubled Entain emerged as the standout underperformer in the operator category, experiencing a significant 12.7% decline in stock value during March.

At the close of February, Entain’s shares were trading at £9.13, but by the end of March had plummeted to £7.97.

Analysts and commentators have extensively discussed Entain’s challenges throughout 2023.

Consequently, it came as little surprise when the company reported an after-tax loss of £879m for the full-year 2023, a stark contrast to its £32.9m profit in 2022.

Despite reporting trading figures in line with expectations for the beginning of the year, Entain issued a cautionary note regarding potential obstacles on the horizon. 

Regulatory changes in pivotal markets, such as the UK’s stake limit on online slot games and the potential adoption of uniform safer gambling measures, alongside proposed tighter deposit limits in the Netherlands from Q2 2024, are anticipated to impact Entain’s FY24 EBITDA by approximately £40m.

This forewarning weighed heavily on Entain’s share price, which hit a monthly low on 11 March at £7.35.

Despite a slight recovery in the share price at the start of April, fuelled by reports of interest from private equity firms in acquiring certain Entain assets, it still lags far behind its 52-week high of £15.17 on 10 May 2023.

Better Collective

In March, affiliates within the gambling sector showed resilience, with Better Collective, which saw a marginal share decline on both the Nasdaq Stockholm and the Nasdaq Copenhagen, being the exception. 

In Stockholm, the shares experienced a decline of 2.9% over the course of the month.

The stock closed at SEK296 on 29 February and decreased to SEK287.50 by the end of March.

Conversely on the Nasdaq Copenhagen, where the company initiated a dual listing last year, shares witnessed a decline of 5.3%, dropping from DKK197.80 to DKK187.40 during the same period.

While March was a relatively uneventful month for the business, it is worth revisiting the affiliate’s capital raise in the previous month.

At the end of February, Better Collective completed an accelerated book-building process, as it issued 5,712,284 shares representing approximately 10% of the company’s total share capital.

The company set the subscription price for these shares at DKK189.40.

Better Collective initially announced its dual listing on the Copenhagen exchange without an offering of additional shares.

The new share issuance targeted institutional and professional investors in Denmark, Sweden, and other selected jurisdictions.

BLS Capital Fondsmæglerselskab, a Danish fund, acquired 50% of the newly issued shares as an anchor investor. 

Better Collective intends to utilise the capital raised to reduce existing debt and position itself for future M&A. 

Investors are surely watching, but Better Collective has agreed to refrain from selling any shares until the release of the company’s Q1 financial report, demonstrating a commitment to shareholder stability during this period of strategic expansion.

Genius Sports

Among the suppliers monitored by NEXT.io, Genius Sports stood out negatively in March. 

The supplier’s stock experienced a significant downturn, dropping from $7.11 at the end of February to $5.71 by the end of March, marking a decline of 19.7%. 

The drop was particularly notable following the release of Genius Sports’ Q4 and full-year 2023 results.

In Q4 2023, Genius surpassed expectations with $127.2m in group revenue, a 20.7% increase year-on-year. 

While the firm’s betting and media technology segments performed well, the sports technology division saw a revenue decrease. 

Despite a substantial increase in adjusted EBITDA to $12m, the supplier still reported a net loss of $38.5m for the quarter.

For full-year 2023, a similar pattern emerged: Genius exceeded its guidance, achieving $413m in revenue and $53.3m in adjusted EBITDA.

However, despite these improvements, the company still reported a net loss of $85.5m for the year.

This discrepancy between positive operational performance and continued net losses appeared to disappoint investors, who might have expected more from Genius Sports.

CEO Mark Locke, however, remained optimistic and commented: “The business is now better positioned than ever to benefit from multiple structural growth drivers across the digital sports ecosystem, and we’re excited to continue our momentum into 2024.”

Over the six-month period from the end of September to the end of March, Genius stock showed a gain of 7.13%.

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