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Investing.com - Rush Street Interactive (NYSE:RSI) shares fell roughly 15% on Friday following potential confusion about Colombia’s fiscal process and possibly unrelated late-day options trading activity. The decline comes despite the company’s strong fundamentals, with InvestingPro data showing $1.02 billion in revenue and a solid balance sheet with more cash than debt. According to InvestingPro’s Fair Value model, the stock appears undervalued at current levels.
Benchmark maintained its Buy rating and $24.00 price target on RSI stock, describing the sell-off as "largely mechanical and sentiment-driven" rather than reflecting fundamental changes in the company’s outlook. This aligns with broader analyst sentiment, as InvestingPro reveals that multiple analysts have recently revised their earnings expectations upward, with price targets ranging from $18 to $26.
The market reaction appears to have priced in a scenario where Colombia’s 19% VAT on gaming deposits becomes permanent, eliminating a potential $30 million AEBITDA benefit that would occur if the tax expires as planned.
Benchmark noted that because the tax is already being collected under an emergency decree, it is currently reflected in Rush Street Interactive’s results, and consensus estimates do not include any benefit from its potential removal.
The research firm believes the market reaction "overstates the risk," adding that the broader Colombian fiscal plan shows the tax proposal faces political challenges and represents just a small component of a larger revenue-raising effort.
In other recent news, Rush Street Interactive has reported several key developments. The company announced the promotion of Kyle Sauers to the role of President, in addition to his current duties as Chief Financial Officer. This move is part of a broader strategy to enhance day-to-day operations and overall performance. Additionally, Shubham Tyagi has been appointed as the new Chief Technology Officer, bringing over 20 years of experience in technology leadership to the team.
In terms of financial outlook, Benchmark has reiterated its Buy rating on Rush Street Interactive, raising the stock price target to $24.00, citing a strong start to the third quarter with notable growth in user engagement and monetization. This comes amid concerns about the expansion of federally regulated prediction markets, which have impacted the stock’s recent performance. Meanwhile, JMP Securities has maintained a Market Outperform rating for PENN Entertainment, reflecting continued positive sentiment in the industry. These developments highlight the dynamic nature of the online gaming and entertainment sectors.
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