Genius Sports distributes official sports data to sportsbooks, sports leagues and media companies. A cog in the global sports betting industry. Initiating coverage with a BUY rating.
Investment Thesis
- GENI aggregates and distributes official sports data to online sportsbook operators, sports leagues and media companies. GENI enters multi-year licensing agreements with globally recognized sports leagues for rights to access and redistribute official data. GENI also offers technology services to local sports leagues to support data collection, in exchange for distribution rights. The company is a core cog in the global online sports betting industry where sports betting generated ~$30 billion revenues globally in 2020.
- GENI’s core customers are online sportsbook operators which enter multi-year contracts to access real-time sports data. We believe GENI’s total addressable market for official data fees was $1.6 billion in 2020 and could double to $3 billion by 2025 as nascent markets like the U.S. grow. GENI’s access to official sports data offers high barriers to entry which requires multi-year licenses and direct relationships with sports leagues. Over time, we see GENI’s growth profile over indexing global sports betting revenues.
- We forecast revenue growth at a 26% CAGR from 2020 to 2025 after 27% revenue growth in 2020. In 2021 and beyond, we expect GENI to remain EBITDA positive, with a 40% long-term margin potential. The recent SPAC transaction also offers capacity to accelerate growth via new verticals and M&A. Our 12-month price target of $21.00 implies 30% upside.
Risks
- Slower-than-expected legalization of online sports betting globally.
- Inflation of data access rights from major sports leagues
Investment Thesis
Genius Sports is a core COG in the global sports betting industry, where global sportsbook operators rely on data feeds distributed by GENI. GENI partners with globally recognized sports leagues via multi-year licenses to collect and redistribute official
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