Sport betting stocks
Sports betting has grown in popularity in recent years, as states across the United States have legalized online betting. According to Wall Street analysts, professional football, as the country’s most popular sport, should help increase user growth and continue pushing the industry toward its potential.
“We expect this to continue as investors become more comfortable with upcoming revenue estimates given aggressive marketing, superior product, and overall better media/betting integration,” Macquarie’s Chad Beynon said in a note to clients on Thursday. “While there will be market share shifts as the field of players expands, we continue to believe that the confirmation of a growing [total addressable market] is the most important driver of the group.”
Many states will be legalizing online gambling during the NFL season for the first time this fall, and companies are competing fiercely to win over new groups of customers.
“This NFL season will be the first for Michigan, Tennessee, Virginia, Wyoming, Arizona, Connecticut, Los Angeles, Maryland, and possibly New York and Florida, all of which will drive a significant increase over last year. In addition, this will be the first football season following DKNG’s conversion to SBTech’s platform, the CZR-WMH merger, CHDN’s Twinspires rebranding, BALY’s Bally Bet, and WYNN’s participation,” Jefferies analyst David Katz said in a note Tuesday.
The sports gambling industry has a diverse set of players, including both traditional casino companies and pure-play online options. Each state also has its own set of rules and regulations that limit the number of businesses that can operate within its borders. In order to gain a competitive advantage, the companies have also spent heavily on marketing and acquisitions.
Jefferies conducted a survey of gamblers and discovered that ease of use was becoming a defining quality for these companies. DraftKings was the best performer in that category among US operators.
Wall Street also likes DraftKings, with buy or overweight ratings from 67 percent of analysts covering the stock, according to FactSet. Among US sportsbook companies worth at least $10 billion, this puts MGM Resorts and Penn National Gaming ahead of Caesars Entertainment.
The following chart depicts Wall Street approval ratings for those stocks and other online betting companies:
Aside from the true gaming companies, there are separate tech companies that provide the services and data that enable the industry to function. Genius Sports is one of these, and it has a buy or overweight rating from the five analysts who cover it. Genius Sports announced a partnership with Penn National’s Barstool Sportsbook on Thursday.
Needham said in a client note on Friday that it is bullish on Genius and the industry as a whole ahead of the holiday season.
“We continue to see compelling reasons to own all of the stocks in our coverage in this space, including DKNG (Buy, $73), PENN (Buy, $115), GENI (Buy, $29), and RSI ($Buy, $20). And if you don’t like our stock picks, we like Mac Jones for offensive rookie of the year at +600,” according to the Needham note.
Solana is popular among developers, who use it to build applications because of its speed and low cost.
Here’s what you need to know about it as an investor.
What exactly is Solana, and why is it becoming so popular?
Consider Solana to be a faster and less expensive Ethereum. Its blockchain can do more than just transfer the sol token between users (as bitcoin does); developers can build DeFi applications, NFTs, and other projects on top of it, and, unlike Cardano, they frequently do. Solana is used to power some of the most popular projects, including the cross-margin trading platform Mango Markets and the NFT project Degenerate Ape Academy.
“Solana has taken a very unique perspective on scaling a blockchain that is extremely different from all of the others,” said Kyle Samani, managing partner at Multicoin Capital, a Solana investor. “And it appears to be quite effective. Developers are building on it, and it is working, the transactions are cheap, and it can handle large spikes, such as when people do NFT drops and a million people show up at the same time. But it isn’t collapsing; rather, it is proving the core theory that you can scale a system in this manner.”
Its goal is to be able to handle billions of users while remaining inexpensive to use in perpetuity. The massive success of Ethereum has resulted in fees that are now too high for most people to transact on it. According to Ycharts, average transaction fees are around $10, which is lower than earlier this year, when they reached as high as $71, but they are still high enough to make crypto developers long for the days when they were cheap.
Ethereum has also slowed down over time. According to EtherScan, it can only handle 15.1 transactions per second.
“The things you can do on Solana – it just opens up a whole new realm of possibilities and the experience, it’s magical,” said Peter Johnson, an investor at Jump Capital, which has invested in many Solana-based projects.
How can you be certain that it will always be cheap?
Solana has a much higher throughput than Ethereum, where the number of transactions or data that can pass through a block in a given amount of time is fixed. Because Solana is built differently, the amount is higher. The network’s economic incentives are set up in such a way that the components that run the network aren’t focused on transaction fees, but rather on the volume of each transaction and maximizing transactions per second.
It’s more akin to the difference between dial-up and high-speed internet. There were many things you could do on dial-up internet that were revolutionary at the time, such as sending large files or streaming video clips, but doing those things with high-speed internet has become much better and, in some cases, cheaper.
According to Johnson, this is why Ethereum fees are so high: there is a limited amount of space in each block, so users must bid to get their transactions into a block. That dynamic does not exist on Solana because each block can handle enough data.
Why should you care if you’re not a programmer?
The value of the sol token, like that of Ethereum or Cardano, is derived from the ecosystem, and those looking for a way to profit see it as an investment in the future and potential of the entire network. That is not the case with bitcoin, where people simply buy the coin and hope it appreciates in value. Furthermore, at around $180, sol is significantly less expensive than ether, which is currently worth around $3,300 as of Saturday.
According to Samani, digital assets are priced rather than valued. There is no discounted cash flow (DCF) model to determine whether an asset is over or undervalued; it is simply a function of supply and demand.
“If your goal is to gain exposure to tech growth cryptocurrency, Solana is arguably your best bet,” he says. “There is no valuation cap, no PE ratio, and the price continues to rise, which I find quite exciting.”
What’s the disadvantage?
Volatility, technology, and regulation, as with many other cryptocurrencies, are significant risks to consider. According to Johnson, the main criticism of Solana is that it is “somewhat less decentralized” than Ethereum.
Many end users may not care about decentralization in the end – the network will still be fast and cheap to use for them – but it is important to those building in the ecosystem because censorship resistance, a feature that ensures a central group of power cannot halt network activity, is a pillar of crypto ideals.
He stated that Solana nodes are typically run from data centers rather than, say, someone’s home. It is theoretically possible to do so, but no one does, according to him, and as a result, it is criticized for not being more decentralized.
Do not refer to it as an Ethereum killer.
With Solana’s rise came a reputation as a potential “Ethereum killer,” but Samani and Johnson argue that’s the wrong way to look at it.
“They’ll coexist for a long time,” Johnson predicted. “I compare it to the operating systems of Apple and Google. At the end of the day, they’re both successful, people create applications for both of them, they both have advantages and disadvantages, and they both know they can coexist.”
China and India stock could beat the market
Bernstein selected Chinese and Indian equities it predicts will outperform other markets in the year ahead.
In addition, it detailed how to invest in securities in such areas.
“Quality stocks in Asia have had a poor run over the last year, including in the last two months when investors would have preferred to rely on quality given the broader market uncertainty,” wrote Bernstein analysts Rupal Agarwal and Anusha Madireddy.
However, they stated that a “small subset of quality stocks” are likely to outperform the market.
The firm evaluates quality stocks based on the following criteria: low leverage, return on invested capital, and earnings before interest and taxes.
Bernstein advises picking “high quality” stocks in Asia and India that have “not been the most hit nor shown the most robust performance.” According to the firm, this means the stocks have average short-term momentum.
According to the analysts, such stocks have historically outperformed the rest of the market in Asia. According to Bernstein, they have outperformed other stocks by 6.3 percent since 2015.
In India, high-quality stocks with momentum have outperformed the market by around 10% in recent months, according to Bernstein.
Investors looking to buy Chinese stocks should look for those with the “highest short-term momentum,” according to a note published on September 6. According to Bernstein, these stocks have outperformed the market since 2015, generating annualized returns of around 13.8 percent.
High-momentum stocks tend to rise quickly in a short period of time, and those who use a momentum strategy look for short-term uptrends: they buy rising shares and sell them when they appear to have peaked.
These are the stocks that Bernstein identified as likely to outperform the market:
Mainland China: Proya Cosmetics, ZTO Express (New York listed), Tsingtao Brewery, and JD.com, an e-commerce giant (Nasdaq listed)
India: Maruti Suzuki India, Infosys, an IT consulting firm, and Bharat Electronics, an aerospace and defense electronics firm.