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  • May stock market sweep: DraftKings dives, Catena Media hits rock bottom
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May’s stock market movements saw some major players facing setbacks. While DraftKings and Playtech experienced significant declines, Catena Media’s share price reached an all-time low.

DraftKings

DraftKings emerged as May’s biggest loser on the stock market in the operator category.

The firm’s share price registered a 15.47% decline, falling from $41.56 at the end of April to $35.13 at the end of May.

The month started realtively well for the US operator.

At NEXT Summit Valletta on 15 May, HappyHour managing partner Robin Reed said that in his view DraftKings will surpass its rival FanDuel in the US market.

“I think they are turning out to be the more agile company. I think they’re more risk-taking, they’re more innovative,” Reed said.

For the third year in a row, Reed took the stage alongside Yolo Group general partner Tim Heath for the predictions panel, moderated by Evolution CPO Todd Haushalter.

“While two or three years ago I would have put my money on FanDuel, now I would put my money on DraftKings,” Reed added.

Interestingly, DraftKings’ stock climbed 4.55% on the day of Reed’s prediction.

However, DraftKings’ decline started at the end of May, along with that of other major US sports betting operators, following the Illinois Senate voting to increase its sports betting tax.

The state voted to implement a progressive sports betting tax, with a top rate of 40%.

This compares to the current rate of 15%, and the increased rate of 35% initially proposed by Governor J.B. Pritzker in his February FY 2025 budget.

The change is expected to reduce margins and overall FY25 EBITDA across the US market, especially for larger operators.

However, while other US operators managed to end the month with only minimal losses (Flutter-owned FanDuel down 0.17%) or even with small gains (MGM Resorts up 1.85%), DraftKings’ stock remained firmly in negative territory.

Playtech

In the supplier category, Playtech experienced the largest share decline in May, with a drop of 9.81%, falling from £5.30 at the end of April to £4.78 at the end of last month.

The company released a trading update for the first four months of 2024 in May, reporting a solid trading performance driven by “strong underlying trends.”

However, the update lacked specific numbers, leaving investors and analysts to speculate.

Analysts at Peel Hunt highlighted Playtech’s modest ambitions and progress, forecasting FY24 revenue and adjusted EBITDA growth of 2.5% and 4% respectively.

Peel Hunt projected €450m in FY24 EBITDA, an increase from €254m in FY20.

A major concern for Playtech is its legal dispute with Caliplay, its largest client and a Mexican B2C brand. Caliplay is currently attempting to exit its contract with the supplier.

Peel Hunt expressed optimism about the dispute’s resolution but cautioned that if Caliplay continues to withhold payments throughout FY24, Playtech’s net debt could be €250m higher.

This would result in a net debt/EBITDA ratio of 0.7x compared to the projected 0.1x, and an FY24 EV/EBITDA ratio of 4.8x compared to 4.2x.

Peel Hunt estimated that Playtech’s revenue from Caliplay would be €190m in FY24, with a significant portion contributing to EBITDA.

They noted that this amount is larger than either party likely anticipated at the start of their relationship.

Despite this, Peel Hunt believes Playtech “could tolerate a modest reduction in its share without materially undermining its valuation.”

Catena Media

Catena Media’s shares have been listed on Nasdaq Stockholm since September 2017, but the share price reached an all-time low of SEK5.51 on 27 May.

Unsurprisingly, the company emerged as the biggest loser in the affiliate category in May, with a total share price decline of 31.11%.

Catena’s shares were trading at SEK8.68 on 30 April, but by 31 May had dropped to SEK5.98.

Over the past six months, the share price has plummeted by 49.83%.

The affiliate has been struggling for some time, and when presenting its Q1 2024 results, the firm announced an “aggressive programme of measures” to address another challenging period.

Revenue, EBITDA, and new depositing customers all experienced double-digit declines.

Revenue from continuing operations fell by 49% compared to the same period last year, to €16m.

Adjusted EBITDA from continuing operations dropped by 90% year-on-year to €1.9m, with an adjusted EBITDA margin of 12%.

The company highlighted significant internal and strategic changes, including a technology overhaul, product development, operational efficiency enhancements, and a new multichannel structure for product diversification.

Moreover, a new product-focused operating model aims to enhance agility and concentrate on high-value products, supported by “fast-response product squads” to address market dynamics promptly.

Catena Media’s new CEO Manuel Stan will take the helm on 1 July, and investors are certainly hopeful that he will steer the company toward recovery.

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