Q3 Gambling Stock Report: Two Huge Misses with PENN and DKNG, MGM and Flutter Hold Strong

Written By Kevin Shelly on November 9, 2021

Q3 results for gaming stock companies are decidedly mixed with wildly different results across the sector. But the overall impact was dropped share prices in gambling stocks.

Flutter’s FanDuel showed why it is good to be the king, maintaining its No.1 status in online gambling stocks. But still, Flutter ($PDYPY) shares lost about $6 on the week.

Pennsylvania-based Penn National Gaming stock took a beating Thursday, missing quarterly projections plus weathering the Dave Portnoy sex scandal of the moment. The stock took a 21% one-day hit as a result but staged a slight recovery Friday.

DraftKings got socked with a one-two from investors, first a drop the day before its earnings came out, which appeared to be collateral damage from Penn’s awful report. And then more pain was inflicted the next day when the company failed to meet earnings expectations. It was ouch, followed by OUCH.

Caesars also missed the mark for the quarter, and its stock took a haircut, though not a buzzcut.

MGM greatly improved year-over-year and beat projections. The stock is up a few bucks as a result. MGM was the clear winner in the segment.

Rush Street Interactive does not report until Nov. 10. We’ll update then.

Let’s look at some of the numbers behind the headlines of PA online gambling brands.

Q3 Good for Flutter, FanDuel ($PDYPY)

PlayPA’s sister site Legal Sports Report has said FanDuel remains dominant in the sports gaming arena.

Parent company Flutter CEO Peter Jackson summed up the quarter:

“We are very pleased to have retained our position as the No. 1 online operator in the US, where FanDuel has made significant progress against each of its key priorities.”

As noted in our FanDuel Q3 report, Jackson said:

“Sometimes it feels like some of the other operators have given up in those markets because they see we’ve got such a strong and commanding lead.”

  • FanDuel had a 46% online sportsbook market share during the quarter and a total online gambling share of 29%.
  • That included 1.8 million active customers. Of that 450,000 players were added during Q3.
  • The total amount wagered on sports grew 155% in Q3 to $1.66 billion.
  • The handle also grew 100% in existing states alone.
  • But sportsbook revenues only grew by 3% to $35 million.
  • That was because the company had a net revenue margin of just 2.1%.
  • That was down from 5.2% in Q3 2019.

The company said in its Q3 earnings presentation that the low margin was a strategy allowing it to invest in bonusing and new customer offers.

Q3 earnings rough for Penn National ($PENN)

The bloodbath at Penn, as reported by PlayPennsylvania, was ugly, both from sharply missing expectations and the newest iteration of Portnoy behaving badly bouncing around the internet.

  • Penn National Gaming Q3 results missed earnings expectations, dropping the share price of the Pennsylvania-based gaming company even before the opening bell.
  • Closing at $57.40, $PENN took a 21% loss on the day.
  • That was the single worst trading day as a public company.
  • The decline wiped away more than $2.5 billion from the company’s market capitalization.
  • Q3 results showed a 41-cent decrease year-over-year.
  • Q3 profit was $86.1 million, or 52 cents a share. Last year’s Q3 profits were $141.9 million or 93 cents per share.

Naturally, Portnoy and some stock pickers suggested buying the dip, and the stock had a small recovery Friday, up about $7 a share. It closed at $61.76.

DraftKings ($DKNG) slides in Q3

DraftKings had a quarterly loss of $1.35 per share versus the estimated loss of $1.11, according to Zacks. That compares to a loss of $0.98 per share a year ago.

MarketWatch was gloomy on Friday about DraftKings. It reported the company had a third-quarter loss “that surprisingly widened and revenue that missed forecasts, as cost of revenue and marketing spending jumped.”

They added, “The stock has slid 11.5% over the past three months.”

Zacks reported:

  • Over the last four quarters, the company has not been able to surpass consensus earnings per share estimates.
  • The company posted revenues of $212.82 million for the quarter ended September 2021.
  • The company missed the earnings estimate by 5.36%.
  • This compares to year-ago revenues of $132.84 million.
  • DraftKings has topped consensus revenue estimates three times over the last four quarters.

Mixed results for Caesars ($CZR)

According to Zacks, Caesars Entertainment, Inc. reported mixed third-quarter results.

  • Earnings missed their estimate
  • The quarterly loss was -$1.08 per share
  • The estimate was a growth of 8 cents a share
  • But the loss was $6.09 per share a year ago
  • Shares of the company dropped 3.3% after the announcement
  • Net revenues during the quarter came in at $2,685 million. That beat the estimate by 1%.
  • The year before, the company reported net revenues of $1,377 million.
  • A $400 million capital plan for Atlantic City properties was highlighted.

$CZR stock price dropped $10 as a result, down to $102.02. It closed around $106 at the end of the week after peaking at $113 earlier in the week.

Q3 earnings solid for $MGM

Yahoo reported MGM Resorts (MGM) came out with quarterly earnings of $0.03 per share, beating the estimate of a loss of $0.04 per share. This compares to a loss of $1.08 per share a year ago.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

  • Revenues were $2.71 billion for the quarter.
  • That surpassed the estimate by 12.22%.
  • This compares to year-ago revenues of $1.13 billion.
  • The company has topped consensus revenue estimates four times over the last four quarters.
  • MGM shares have added about 52% since the beginning of the year versus the S&P 500’s gain of 23.3%.
  • Shares of the company gained 3.4% after results were released.

Lead image via Dreamstime.com

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Kevin Shelly

Kevin C. Shelly is an award-winning career journalist who has spent most of his career in South Jersey. He's the former assistant city editor of The Press of Atlantic City, where he covered the casino industry and Atlantic City government as a reporter. He was also an investigative, narrative enterprise, and features reporter for Gannett’s Courier-Post.

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