DraftKings, FanDuel Parent Rally On Legislation That Targets Prediction Markets | Investor's Business Daily BREAKING: Futures Rise, Oil Prices Fall On Iran Deal Hopes A bipartisan bill in the U.S. Senate would ban sports betting on prediction markets, a move that would benefit betting platforms such as DraftKings (DKNG), FanDuel parent Flutter Entertainment (FLUT) as well as Rush Street Interactive (RSI). The bill targets prediction-market exchanges such as privately held Kalshi and Polymarket, which offer ...

Core Viewpoint - Rush Street Interactive (RSI) has shown resilience in the stock market amidst geopolitical tensions, with its stock price recently breaking out of a double-bottom base and entering a buy zone, indicating potential for further gains [1] Company Performance - Rush Street Interactive operates the BetRivers casino app and has reported steady earnings and sales growth over the past eight quarters, although profit growth has slowed in the last four quarters [1] - Fourth-quarter earnings increased by 14% to $0.08 per share, missing analysts' expectations of $0.10, while sales rose by 28% to $325 million, exceeding forecasts of $306 million [1] - Monthly active users grew by 37% in the U.S. and Canada to over 278,000, and in Latin America, the user base increased by 47% to over 493,000 [1] Future Outlook - For 2026, the company projects sales of $1.4 billion, representing a 23% growth from 2025, with analysts estimating earnings of $0.54 per share, indicating a 46% increase [1] - For 2027, earnings are expected to reach $0.73 per share, reflecting a 36% growth [1] Stock Performance - Shares of Rush Street Interactive surged by 53% in 2025 and have gained over 5% year-to-date as of the latest session [1] - The stock's Relative Strength Rating is at 90, placing it among the top 9% of stocks in the Investor's Business Daily database over the past 52 weeks [1] - Institutional ownership stands at 60% of outstanding shares, with mutual funds being net buyers over the past 13 weeks, as indicated by an Accumulation/Distribution Rating of B+ [1] Industry Position - Rush Street Interactive ranks first in the leisure-gaming and equipment group, which is positioned 167th among IBD's 197 industry groups [1]

Core Insights - Richard Todd Schwartz, CEO of Rush Street Interactive, sold 247,114 shares for approximately $4.16 million on February 17, 2026, as reported in an SEC Form 4 filing [1][2]. Transaction Summary - The shares sold directly amounted to 247,114, with a transaction value of $4.16 million [2]. - After the transaction, Schwartz holds 701,934 shares, valued at approximately $11.89 million based on the market close on February 17, 2026 [2]. - The transaction value was based on a reported price of $16.82, while the post-transaction value was calculated using a market close price of $16.94 [2]. Company Overview - Rush Street Interactive reported a trailing twelve months (TTM) revenue of $1.13 billion and a net income of $33.31 million [4]. - The company employs 912 individuals and experienced a 48.50% price change over the year ending February 28, 2026 [4]. Company Snapshot - Rush Street Interactive operates as an online casino and sports betting company in the U.S. and Latin America, marketing its services under the brands BetRivers.com, PlaySugarHouse.com, and RushBet.co [5]. Recent Performance - In Q3 of fiscal year 2025, Rush Street achieved its tenth consecutive quarter of revenue growth, surpassing analysts' expectations by 4.3% [6]. - The company reported annual revenue exceeding $1 billion for the first time, with earnings per share (EPS) growing approximately 973% year over year [7]. - Other companies in the casino and betting industry, such as DraftKings and Hasbro, have also reported positive earnings results [8]. Shareholder Activity - Schwartz's recent sale of shares ties for his largest transaction, representing 26.0% of his direct holdings prior to the sale [9]. - The stock of Rush Street Interactive rose approximately 40% in 2025, indicating potential for long-term growth in the booming online betting industry [10].

Group 1: Company Analysis - SM Energy Co reported a significant increase in production, with a year-over-year growth of 15% in the last quarter, driven by strong performance in the Permian Basin [1] - Century Aluminum Company has seen a rise in aluminum prices, which increased by 20% over the past six months, positively impacting its revenue outlook [1] - QXO Inc has expanded its market presence, achieving a 10% increase in market share due to strategic partnerships and product innovations [1] Group 2: Industry Trends - The energy sector is experiencing a recovery, with overall production levels rising by 12% across major companies, indicating a rebound from previous downturns [1] - The aluminum industry is benefiting from increased demand in the automotive and aerospace sectors, contributing to a projected growth rate of 5% annually over the next five years [1] - The gaming industry, represented by companies like Rush Street Interactive Inc, is witnessing a surge in online gaming participation, with a 30% increase in user engagement compared to last year [1]

Group 1: Consumer Confidence and Economic Indicators - Consumer confidence rose by 2.2 points to 91.2 in February, surpassing analysts' expectations of 87 [4][10] - The unemployment rate decreased to 4.3% in January from 4.4% in December, with 130,000 new jobs added [6] - Short-term inflation expectations fell to a 13-month low of 3.5% in February from 4% in January, indicating a potential easing of inflation [7] Group 2: Recommended Consumer Discretionary Stocks - Rush Street Interactive, Inc. (RSI) has an expected earnings growth rate of 43.2% for the current year, with a Zacks Rank of 2 [8] - Crocs, Inc. (CROX) is projected to have a 5.7% earnings growth rate, also holding a Zacks Rank of 2 [11] - Callaway Golf Company (CALY) expects a significant earnings growth rate of 61.9%, with a Zacks Rank of 1 [12] - Dolby Laboratories, Inc. (DLB) anticipates a 1.7% earnings growth rate, currently rated as 2 [14] - MasterCraft Boat Holdings, Inc. (MCFT) has an expected earnings growth rate of 64.1%, holding a Zacks Rank of 1 [15] Group 3: Earnings Estimate Revisions - The earnings estimates for RSI, CROX, CALY, DLB, and MCFT have all improved over the past 60 days, indicating positive market sentiment [3][10]

Group 1: Core Insights - The article highlights three key stocks in the online gaming sector that are considered strong buying opportunities for 2026: DraftKings, Flutter Entertainment, and Rush Street Interactive [1] - DraftKings reported a 43% year-over-year revenue increase to $2 billion, with adjusted EBITDA soaring 283% to $343 million, indicating strong growth potential in the online gaming market [1] - Flutter Entertainment, parent company of FanDuel, holds over 40% market share in U.S. sports betting, generating approximately $12.5 billion in annual revenue, with a 45% increase in EBITDA and margins reaching 21% [1] Group 2: Company-Specific Highlights - DraftKings is recognized as a leader in the online gambling space, with expectations for continued growth driven by state expansions and synergies in iGaming/iLottery [1] - Flutter Entertainment is positioned as a strong growth bet, trading at 4.5 times sales and 18 times forward EBITDA, which is below its historical average, making it an attractive value proposition [1] - Rush Street Interactive demonstrated a 38% revenue growth year-over-year, with a valuation of just 2.5 times sales, and recently achieved GAAP profitability with an EPS of $0.15, indicating significant upside potential [1]

Core Viewpoint - Rush Street Interactive, Inc. (RSI) shows a significantly improving earnings outlook, making it a solid investment choice as analysts continue to raise earnings estimates for the company [1][3]. Earnings Estimate Revisions - The rising trend in earnings estimate revisions reflects growing analyst optimism, which is expected to positively impact the stock price [2]. - The current quarter's earnings estimate is $0.12 per share, representing a +33.3% change from the previous year, with a 21.43% increase in the Zacks Consensus Estimate over the last 30 days [6]. - For the full year, the expected earnings are $0.53 per share, indicating a +43.2% change from the prior year, with a 13.89% increase in consensus estimates due to two upward revisions [7][8]. Zacks Rank - Rush Street Interactive has achieved a Zacks Rank 2 (Buy), indicating strong agreement among analysts in revising earnings estimates upward, which historically correlates with stock performance [9]. - Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have shown significant outperformance compared to the S&P 500 [9]. Investment Outlook - The stock has increased by 5.1% over the past four weeks due to strong estimate revisions, suggesting potential for further upside, making it a candidate for portfolio addition [10].

Core Viewpoint - Rush Street Interactive, Inc. (RSI) shows potential for significant upside, with a mean price target of $24.33 indicating a 30.4% increase from the current price of $18.66 [1] Price Targets and Analyst Consensus - The average price target consists of nine estimates ranging from a low of $20.00 to a high of $30.00, with a standard deviation of $2.69, suggesting variability in analyst predictions [2] - The lowest estimate indicates a 7.2% increase, while the highest suggests a 60.8% upside, highlighting the range of analyst expectations [2] - A low standard deviation indicates strong agreement among analysts regarding the stock's price movement direction, which can be a starting point for further research [9] Earnings Estimates and Analyst Optimism - Analysts have shown increasing optimism about RSI's earnings prospects, as evidenced by a strong consensus in revising EPS estimates higher, which correlates with potential stock price increases [11] - Over the last 30 days, two EPS estimates have been revised upward, leading to a 13.9% increase in the Zacks Consensus Estimate [12] Zacks Rank and Investment Potential - RSI holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for upside [13] - While consensus price targets may not be entirely reliable, the implied direction of price movement appears to be a useful guide for investors [14]

Core Viewpoint - The article emphasizes the investment philosophy focused on identifying mispriced securities through understanding the financial drivers of companies, often revealed by a DCF model valuation [1]. Group 1: Investment Philosophy - The investment approach is centered on small cap companies across US, Canadian, and European markets [1]. - The methodology allows for flexibility beyond traditional investment styles, incorporating value, dividend, and growth investing to assess a stock's risk-to-reward profile [1]. Group 2: Market Focus - The focus is primarily on small cap companies, indicating a strategy that may involve higher volatility and potential for significant returns [1].

Financial Performance - Adjusted EBITDA for the year ended December 31, 2025, was $153.655 million, a significant increase from $92.539 million in 2024 and $8.168 million in 2023 [393]. - The company generated a net income of $74.029 million in 2025, compared to a net income of $7.236 million in 2024 and a net loss of $60.055 million in 2023 [393]. - Revenue for the year ended December 31, 2025, reached $1,134,428, representing a 23% increase from $924,083 in 2024 [428]. - Net income surged to $74,029 in 2025, a remarkable increase of 923% compared to $7,236 in 2024 [428]. - Income from operations rose significantly by 249% to $87,424 in 2025 from $25,048 in 2024 [428]. User Metrics - Monthly Active Users (MAUs) in the United States and Canada increased year-over-year, driven by strong customer retention and effective marketing strategies [378]. - Average Revenue Per Monthly Active User (ARPMAU) remained flat in the United States and Canada for 2025, despite a significant increase in MAUs [386]. - The year-over-year increase in MAUs in Latin America was attributed to strong customer retention and the launch in Peru during Q3 2024 [382]. Market and Competition - The company operates in 16 U.S. states and four international markets, focusing on online casino and sports betting [368]. - The online gaming market is still in its early stages, with many U.S. states and foreign jurisdictions exploring legalization and regulation [396]. - The company faces competition from established industry players, but leverages its proprietary platform and marketing strategies to maintain a competitive edge [394]. Revenue and Costs - Costs of revenue increased by 23% to $741,664 in 2025 from $602,036 in 2024 [428]. - Revenue increased by $210.3 million, or 23%, to $1,134.4 million in 2025 compared to $924.1 million in 2024, driven by growth in existing markets and expansion into new markets like Peru [429]. - Costs of revenue rose by $139.6 million, or 23%, to $741.6 million in 2025, with gaming taxes, market access costs, and payment processing costs contributing significantly to the increase [430]. Expenses - Sales and marketing expenses increased by 4% to $164,650 in 2025, up from $158,590 in 2024 [428]. - General and administrative costs decreased by 5% to $100,720 in 2025 from $106,206 in 2024 [428]. - Depreciation and amortization expenses increased by $7.8 million, or 24%, to $40.0 million in 2025, with the percentage of revenue rising to 4% from 3% in 2024 [433]. Cash Flow and Financial Position - As of December 31, 2025, the company had $336.3 million in cash and cash equivalents, excluding restricted customer cash deposits [445]. - Net cash provided by operating activities increased by $58.6 million to $165.0 million in 2025, compared to $106.4 million in 2024, primarily due to higher net income of $66.8 million [456]. - The company expects material cash requirements in the next 12 months to include $18.3 million in non-cancellable purchase obligations with marketing vendors and $4.1 million in minimum license and market access fees [446]. Stock and Shareholder Returns - The stock repurchase program authorized up to $50 million, with 733,019 shares repurchased in 2025 at an average price of $10.41, totaling approximately $7.6 million [454]. Tax and Regulatory Environment - The company is subject to varying tax rates on online casino and sports betting across different jurisdictions, which can impact profitability [398]. - Income tax benefit was $85.1 million in 2025, compared to an expense of $24.6 million in 2024, primarily due to the release of a valuation allowance [436]. Economic Factors - Inflation has not materially affected the company's financial condition or results of operations as of December 31, 2025, but potential inflationary pressures could impact costs and customer spending [476]. - Foreign currency exposure accounted for less than 20% of revenue for the fiscal years ended December 31, 2025, and 2024, with no material effect from a 10% change in currency values [475].