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Why Genius Sports Is Crashing Today

By Rich Duprey – Nov 23, 2021 at 12:33PM

Key Points

  • Genius Sports went public via a merger with a special purpose acquisition company in April.
  • It is the official data partner of the NFL and other major sports leagues.
  • A much wider-than-expected quarterly loss seems to have spooked the market.

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The market seems to be focusing on the wrong results from the sports data provider.

What happened

Shares of Genius Sports (GENI 5.64%) were plummeting 23.1% at 11:16 a.m. ET after the sports-focused data management and "integrity services" provider reported generally upbeat results.

Revenue soared 70% from the year-ago period, well ahead of Wall Street's consensus estimate of $62.8 million, noting over 97% of the market accessing National Football League data was doing so exclusively through Genius Sports.

Sports fans holding their heads.

Image source: Getty Images.

So what

Occasionally, though not so often, companies that handily trounce analyst expectations see their stocks take a hit on the news. A possible reason for the big drop is Genius Sports reported quarterly losses that were much worse than forecast, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) coming in at a $322 million loss, or $0.37 per share, compared to the loss of $0.12 per share that was predicted.

Genius Sports had reported an adjusted profit of almost $9.4 million a year ago.

Even so, the sports information specialist said its performance in the quarter was good enough to allow it to slightly raise guidance for the full year, going from a range of $255 million to $260 million to somewhere between $257 million and $262 million.

Now what

Genius Sports' business continues to solidify. During the quarter it announced strategic partnerships with a full range of sportsbooks to provide them with its complete offering of NFL-related products.

CEO Mark Locke said: "While only months into our first NFL season, we are even more confident of the long-term prospects of the partnership. We are transforming the global sports betting market through our progressive investment in technological innovation, and we will continue to do so for years ahead."

Shares are now down 22% in 2021 and have lost more than half their value from the 52-week high hit back in May. Considering all the agreements in play with major sports leagues and organizers, the sport stock's movements today seem like a buying opportunity.

Rich Duprey 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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