The numbers out of Rush Street Interactive (RSI) earlier this week demonstrated this company is a real player in the online gambling sector. We have most of our attention on Penn National (PENN) or DraftKings (DKNG) , or even the legacy casinos, but this sector is going to have multiple winners.
RSI posted a loss of a penny per share but seeing how Wall Street anticipated a loss of $0.32, this is a huge bottom-line beat. Revenue of $100 million also topped the $94.37 million analyst estimates. That represents a 260% growth year-over-year. The company is still spending to acquire though, but real money monthly active users (MAUs) surged 116% year-over-year and 22% sequentially. RSI actually clocked in as the number U.S. online casino as measured by gross gaming revenue last quarter. With $225 million in cash, the company is well positioned to continue advertising and promotions, building their brand and cementing users. With 2021 projections of $440 million versus expectations of $372 million, the current projection shows continued strong growth of 58% for the full year.
Shares responded with a surge yesterday. After an early day pullback, the $18 level now acts as support for bulls. A daily close below that level likely puts us back in the trading range of $15.50 to $18 with the 20-day simple moving average (SMA) acting as resistance. Bulls will have to push through the 50-day SMA just below $20. Today's high as well as yesterday's have been the first two tests on the resistance level. A third push should be momentum traders into the name.
Overall, I view this as a long-term buy-and-hold name that could easily push into the $25 to $30 range over the next 6 to 12 months and hold there, but for traders, a break over $20 offers a quick 10% upside potential with a stop around $18.75 on a momentum trade. For put sellers or put spread sellers, the $17.50 strike on the short side (and $15 on the long, if a spread) should be the focus.
Late Friday afternoon doesn't have me making a move higher, but this is one I want to watch for a breakout next week.
