Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Las Vegas Strip and beyond
J.P. Morgan analyst Joseph Greff, in an August 19 note, looked at the Las Vegas Strip. “The Las Vegas Strip market had a mixed 2Q24, as EBITDAR largely beat consensus estimates on better non-gaming spend, as table games drop and slot handle were flat to down year-over-year (similar to 1Q24),” Greff wrote. “Expectations for the second half of 2024 have come down on MGM’s commentary around soft F1 sales and increased consumer slowdown concerns. U.S. regional gaming results were fine in relation to lower revenue/margin expectations. The Las Vegas locals market remains solid, at the high-end.”
Macau’s dog days of summer
David Katz, Jefferies analyst, warn that “August continues to trend solidly as expected, according to our sources and checks, due to the summer holidays,” he wrote in a August 19 note. “However, we believe we are approaching a near-term peak into September, which typically generates lower visitation and revenue than the summer months. Promotional activities and reinvestment remain part of the ongoing strategies in Macau, adding an extra layer of conservatism to forecasts. We expect a neutral reaction in the shares.”
MGM/Grupo Globo joint venture
David Katz of Jefferies also wrote about MGM’s joint venture with Grupo Globo, the largest media group in Latin America, as MGM seeks an igaming and sports betting license in Brazil. “The app will be launched under the BetMGM brand in Brazil in early 2025, assuming regulatory approval later in 2024,” Katz wrote. “Currently, Brazil is an estimated $3 billion market and is expected to grow double digits annually near term. In our view, Brazil is an important global market for MGM’s digital segment, however, we believe the main focus for the company remains overcoming challenges to BetMGM’s operations domestically.”
Gambling.com quarterly report
David Bain, an analyst for B Riley Securities, looked at Gambing.com’s quarterly report, writing on August 16, “Recall that Gambling.com’s last quarterly call centered around the potential negative impact from Google’s policy change regarding the treatment of commercial content, significantly diminishing the effectiveness of Gambling.com’s media partnerships with The Independent, McClatchy, and Gannett. While the policy was disruptive to Gambling.com’s initial CY24E guidance, we also believed Gambling.com could capture much of the lost revenue with its owned sites, also creating much stronger flow-through. Further, we believed (and continue to believe) that the opening allows Gambling.com an opportunity to capture revenue lost by competitors, many of which have more advertising partnerships than Gambling.com.
Truist Securities analyst Barry Jonas also commented on August 16. “Quarter 2 adjusted EBITDA of $11.2 million (up +19% year-over-year) was well above our/Street estimates of $8.3 million/$7.9 million. Net revenues of $30.5 million (up +18% year-over-year) were also above our/Street’s $27.4 million/$26.9 million, with adjusted EBITDA margins of 37% +630 basis points/+820 basis points more favorable than we/Street had modeled. Free cash flow of $6 million missed our estimate of $7.2 million reflecting unfavorable changes in working capital and increased capex. Management highlighted the revenue growth to be largely driven by a record delivery of NDC Media (~108,000) and strong igaming revenue across Europe.”
