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  • September stock market sweep: Catena Media, RSI and NeoGames resilient in testing month
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September presented a challenging stock market landscape and the real winners turned out to be the few firms that avoided losses. 

Surprisingly, none of our most prominent winners among operators, affiliates, and suppliers recorded significant gains.

Nearly all the gambling stocks on our watchlist faced significant declines, as highlighted in our earlier analysis of the biggest losers.

Catena Media

Affiliate business Catena Media, a consistent member of our list of biggest losers, demonstrated remarkable resilience in September.

However, the stock’s modest gain of 3%, from SEK 17.98 on 31 August to SEK 18.57 by the end of September, underscored the market’s overall challenges.

Catena Media’s stock has been quite volatile over the past six months, characterised by peaks in the first quarter and subsequent declines. 

Notably, the company engaged in several share buybacks during September, repurchasing a total of 115,000 shares. 

Share buybacks have the potential to boost share prices as they result in a decrease in the number of outstanding shares. 

This reduction typically enhances the earnings per share (EPS) metric, making the stock appear more attractive to investors. 

Additionally, share buybacks often send a positive signal to the market, signifying that the company has confidence in its financial stability and that its shares may be undervalued. 

This boost in investor confidence can contribute to an increase in share prices.

However, the long-term impact of share buybacks may be limited if the underlying fundamentals of the company do not support sustained growth. 

Therefore, while share buybacks can lead to share price gains, investors should take a holistic view, considering both the immediate effects and the company’s overall financial health.

Catena Media’s strategic shifts, including the sale of AskGamblers and a focus on North America, have come with mixed results. 

In Q2 2023, the company faced revenue declines and a substantial drop in adjusted EBITDA, underscoring the challenges it has encountered.

The North American sector’s performance was also lacklustre, as revenue dipped to €12.5 million, marking a 16% slide compared to the second quarter of 2022. 

Unfortunately, the stock has witnessed a substantial decline of approximately 40% over the last half-year and a 20% drop over the past year.

Moreover, between the end of September to 13 October, the stock witnessed another decline of 6%.

Rush Street Interactive

Within the operator segment, Rush Street Interactive (RSI) distinguished itself by avoiding losses.

On 31 August, the stock closed at $4.60 and closed at $4.62 on 29 September, exhibiting a slight uptick of 0.4%. 

Notably, RSI saw even more robust performance earlier in the month, reaching a peak of $5.35 on 12 September, which was also the highest it has traded for over the past six months.

In a month marked by cyberattacks affecting industry giants like Caesars and MGM Resorts, resulting in a 14% loss for Caesars and a 15% drop for MGM in September, RSI emerged as one of the few US stocks to maintain a positive trajectory.

RSI recently delivered a positive Q2 performance. Revenue reached $165.1m, which represented a 15% increase compared to the same period in 2022. 

Additionally, net loss in Q2 2023 was $16.7m, signifying a significant improvement from the $28.3m net loss in Q2 2022.

More importantly, RSI achieved a positive adjusted EBITDA in Q2 and CEO Richard Schwartz expressed optimism about the company’s prospects for a profitable full year in 2023 if market conditions remain favourable in the second half of the year.

Schwartz also highlighted RSI’s successful expansion in Latin America, particularly in Colombia, where revenue grew by 30% year-on-year. 

Further growth is anticipated in Mexico, and Schwartz mentioned the potential opportunities arising from the recent regulation of sports betting in Brazil.

Brazil’s gambling bill garnered significant attention last month and was successfully passed in mid-September, coinciding with the time when RSI achieved its peak performance, which could have been one factor for the stocks up. 

In the US, RSI has lagged behind market leaders such as FanDuel, DraftKings, BetMGM, and Caesars. However, RSI has strategically prioritized the Latin American market from an early stage.

This strategic focus on Latin America appears to be yielding positive results. 

Over the past six months, RSI has demonstrated significant growth, with a 49% increase in stock value between 31 March and 29 September. 

NeoGames

iLottery and iGaming solutions provider NeoGames has also demonstrated its resilience in the market. 

Starting at $26.80 on 31 August and closing at $27.00 by the end of September, the company’s stock value has remained relatively stable throughout the month. 

Despite the modest gain, NeoGames emerged as the top-performing supplier in our September stock market sweep. 

In May, NeoGames experienced a notable surge in its stock price, skyrocketing from $12.84 on 12 May to $27.17 on 15 May.

This surge was primarily attributed to the company’s announcement of its acquisition by Aristocrat Leisure at $29.50 per share in an all-cash deal.

Following the acquisition announcement, NeoGames maintained its value, consistently trading at around $27.00. The stock displayed stability throughout September.

However, a recent dip of nearly 5% occurred between 6 October and 13 October, likely due to concerns stemming from the ongoing conflict in Israel.

NeoGames, headquartered in Tel Aviv, expressed profound sorrow for the tragic events in Israel.

CEO Moti Malul commented: “At NeoGames, employee safety and well-being is core to our culture. We are dedicated to doing our part in assisting families, friends and colleagues to cope with these appalling circumstances.” 

Malul also reaffirmed NeoGames’ resolute commitment to business continuity.

“We remain resilient and our entire business in Israel continues to operate normally. As a global company with offices throughout the world, we maintain a comprehensive and proven business continuity programme, which remains in place and can be adapted to circumstances as they evolve. 

“This programme is designed to ensure control and stability of our operations and thus, the operations of our customers continue uninterrupted,” he added. 

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