What happened
Shares of online gambling company Rush Street Interactive (RSI +1.28%) jumped by as much as 17.2% in Thursday trading after it reported its fourth-quarter 2020 financial results. Shares were still up by 13% as of 1:30 p.m. EDT.
So what
Revenue was up an incredible 260% year over year to $100.0 million in the quarter, gains made possible by the increase in the number of states that have made sports betting or online gambling legal. However, Rush Street's net loss rose from $15.1 million a year ago to $48.8 million, partly due to higher expansion and marketing expenses.
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For 2021, management is forecasting revenue in the $420 million to $460 million range, up from its previous guidance of $320 million. That's music to investors' ears.
Now what
At this point, the investment thesis for any online gambling company is likely to focus on the theory that it'll be a growth stock for many years as more states legalize such gambling and open their markets to more companies. What we'll want to watch is how quickly new markets open and how many competitors are allowed into each one, because Rush Street could have a long runway of top-line growth ahead with rapidly improving margins as the scale of online gambling increases.
