Genius Sports Limited (GENI +2.26%), a provider of official live sports data, saw its stock decline nearly 60% over the past 12 months. That drop was mainly caused by its acquisition of Legend, a digital sports and gambling media company, in a dilutive, debt-driven $1.2 billion deal. Its steeper-than-expected losses over the past few quarters exacerbated that pressure.
However, some contrarian investors believe Genius could bounce back as a proxy play on growing prediction markets like Kalshi and Polymarket. Let's see how that could happen, and if those headwinds could drive Genius' stock higher over the next few years.
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Does Genius sell any data to Kalshi and Polymarket today?
Genius generates most of its revenue by selling its data to more than 300 sportsbooks like DraftKings (DKNG +0.39%) and FanDuel. It also sells its real-time sports data to media companies (for stats, graphics, and overlays) and advertisers.
Genius doesn't have any direct relationships with prediction markets like Kalshi and Polymarket, which enable traders to bet on a broad range of event outcomes beyond sports. However, prediction markets still need reliable data from trusted platforms. Today, these markets still primarily rely on public data, oracle networks, and internal settlement systems to aggregate live sports data rather than dedicated sports data platforms like Genius Sports.
So for now, Genius is primarily a play on the infrastructure of live sports betting rather than the future growth of prediction markets. But if government regulators push prediction markets to use official sports data for their bets, Genius could eventually evolve into a major data provider, fraud-detection service, or settlement partner for those growing platforms.
NYSE: GENI
Key Data Points
Do those potential catalysts make Genius a good buy?
From 2025 to 2028, analysts expect Genius' revenue to grow at a 20% CAGR from $670 million to $1.17 billion. They also expect it to turn profitable this year and grow its net income at a 165% CAGR from $24 million to $165 million over the following two years.
That's a rosy outlook, but it can only achieve that growth if more U.S. states legalize gambling, more sportsbooks expand domestically and internationally, and gamblers place more bets on single sporting events. It's also evolving from a straightforward data vendor into a diversified sports data operating system with AI-powered live stats, automated officiate tools, advanced analytics tools, and streamlined data pipelines for the media and sports betting markets.
With a market cap of $1.1 billion, Genius looks surprisingly cheap at 1.4 times this year's sales. Therefore, its stock could soar much higher if it's revalued as a high-growth play with significant exposure to the sports betting, AI software, and prediction markets industries.
