Rumors That Fanatics is in Talks to Acquire Rush Street Interactive (RSI) Seen as Likely Accurate, Shares Continue to Rally

September 16, 2021 9:55 AM EDT
Get Alerts RSI Hot Sheet
Price: $19.95 -0.45%

Rating Summary:
    6 Buy, 2 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 18 | New: 15
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Shares of Rush Street Interactive (NYSE: RSI) are up almost 10% in today’s trading session after closing 6.13% higher yesterday on rumors the company is in takeover talks with Fanatics.

The Action Network reported yesterday RSI management held, as well as Swedish company Betsson, held “productive” meetings with Fanatics.

Benchmark analyst Mike Hickey has weighed in on rumors to say he believes they are accurate. The analyst rates RSI with a Buy rating and a $25.00 per share price target.

“Fanatics recently hired Matt King as CEO, an astonishing move considering FanDuel has the #1market share position in U.S. online sports betting market and was moving toward an initial public offering. We believe that Fanatics desires to compete as an online sportsbook operator, and that building a sportsbook from scratch would be non-optimal given the current growth of the OSB and iGaming markets and the necessity to acquire extensive technology and licenses to compete in each state,” Hickey said in a client note.

The Action Network’s Darren Rovell argued that Fanatics and Matt King are unlikely to start their sportsbook business from the scratch. The RSI acquisition would offer immediate market access and live operations.

“RSI could leverage Fanatics extensive database of sports fans, that could be accelerate user acquisition, like how FanDuel and DraftKings has leveraged Daily Fantasy Sports player databases to convert users to sportsbooks and online casino. Further, if Fanatics RSI were able to win the rights to ESPN’s name in gambling, they would have impressive national brand recognition. We suspect the iconic founder of Rush Street Interactive, Neil Bluhm, would join the board of Fanatics, like Tilman Fertitta is joining the DKNG board and will be their largest shareholder,” Hickey adds.

Hickey estimates revenue of $512 million over FY22 period for RSI while the current market capitalization is around $4 billion.

Today’s high of $18.43 marks a new 6-month high for RSI.



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