Michael Hakes - CFA, MBAFlutter EntertainmentFLTR.LDON'T BUYSep 15, 2023

They reported last night a big top and bottom line miss and very weak guidance. Is -61% the past year. Shares tanked 13.8% today. Doesn't see how this can break its losing streak.

FLUT has been weak on slower than expected guidance and concern on the prediction market taking away some core gambling business/dollars. Sentiment has shifted negative. But decent growth is still expected (in the 15% range). The balance sheet still has a lot of debt which is a risk if things de-celerate. But at 25X earnings, still with a very strong market share in most markets (including the US sports market) we still have a generally positive view towards the company.
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Is the parent company of FanDuel. They reported today a mixed quarter with soft revenue thanks to adverse gambling outcomes, but also higher-than-expected earnings. Flutter is moving into the predictions market through FanDuel with CME Group.

Owner of FanDuel, the bigger competitor to DKNG and a lower beta. Based in UK. Attractive over the long term. 

A new law means that professional bettors will pay taxes on their winnings (but don't get a full tax deduction on losses). However, this could discourage bettors. However, since mid-June when the legislation was unveiled the shares of DKNG and FLUT have been rallying. Major sports books already discourage bettors who win too often. Also, the books cater to VIPs, those who bet a lot but don't win as much as the big winners. There's a chance this bill may not pass or could be amended. The two stocks hold a duopoly in sports betting, and more states are legalizing sports betting, so he remain bullish in them.

Good question whether consumers would spend less for online gaming during a slowdown. Probably, but he feels demand is somewhat inelastic. Share price up and down, lots of volatility. Dropped below 200-day, but now picked back up. 200-week MA moving higher. Doesn't look bad from technical perspective. 

Valuation not cheap, but you're buying it for the growth rate, which is 33% going forward. Online gaming is a growing industry. Higher beta, so a very small position only in your portfolio.

Shares have tumbled. Last week, they reported a good quarter though a light full-year forecast, because consumer confidence has slid due to tariffs. They have 43% market share in the US. They grew revenue in the US by 32% with 19% total revenue growth. They manage costs. There's room to grow with states like California and Texas still barring sports betting which is popular because it's a cheap form of entertainment, he thinks. 

Online gambling business based in Europe.
Largest asset is USA business units DraftKings and Fan Duel.
Very well run company.
Managed excessive tech bubble well - didn't raise too much money.
Good to buy on share price weakness.