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Why Shares of Rush Street Interactive Jumped 16.2% on Monday

By Travis Hoium – Aug 9, 2021 at 5:28PM

Key Points

  • A separate acquisition in online gambling sent shares higher today.

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Could the online gambling company be a buyout target soon?

What happened 

Shares of online gambling company Rush Street Interactive (RSI) jumped as much as 16.2% in trading on Monday as one of its closest competitors was bought out. DraftKings (DKNG -1.30%) announced the acquisition of Golden Nugget Online Gaming (GNOG) for $1.6 billion, starting what could be a wave of consolidation in the space. Shares of Rush Street closed the day up 14.4%.

So what

The big news of DraftKings' acquisition of Golden Nugget Online has pushed investors to think about whether consolidation is coming to the space. Online gambling has spread across the country, which has lifted most of the operators' stock prices, but in the long term, it might not make sense to have a dozen companies taking bets. And if smaller companies are gobbled up by larger ones, Rush Street Interactive could be next, or so the market seems to be speculating. 

Person placing bet at a bar.

Image source: Getty Images.

To be clear, there's no buyout on the horizon for Rush Street Interactive, and competitors seem to be fine building the online gambling business and becoming growth stocks on their own. But that didn't keep the stock from jumping on acquisition news today. 

Now what

While this might be an exciting day for Rush Street shareholders, I don't think this meaningfully changes the investment thesis for the stock. Online gambling continues to grow, this is one of the leaders, and management should focus on that internal growth of the core business. As long as that continues, the stock could do well, but today's speculative bounce might not last. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Rush Street Interactive, Inc. Stock Quote
Rush Street Interactive, Inc.
RSI
$3.47 (%)
DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$15.14 (-1.30%) $0.20
Golden Nugget Online Gaming Stock Quote
Golden Nugget Online Gaming
GNOG

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