Genius Sports SPAC Surges on Bullish Revenue Forecast, Fresh Analyst Coverage

Posted on: January 20, 2021, 12:14h. 

Last updated on: June 30, 2021, 10:18h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of dMY Technology Group, Inc. II (NYSE:DMYD) are soaring Wednesday after Genius Sports — the special purpose acquisition company’s merger partner — issued an enthusiastic revenue forecast.

Genius SPAC
Genius Sports CEO Mark Locke. The company’s merger with a SPAC appears to be closing. (Image: Bloomberg)

Helping the cause is new analyst coverage of the sports betting data provider and a recent filing with the Securities and Exchange Commission (SEC). The filing indicates Genius is close to making its debut as a standalone company.

In a Form F-4 filing with the SEC, Genius said it expects to post revenue of $145 million in 2020 on adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $14 million. That signals some level of profitability, which is a rarity among many SPAC merger targets and young, emerging growth companies.

Looking ahead, our anticipated merger with dMY II and New York Stock Exchange listing will strengthen our position as a true partner to sports leagues, sportsbooks, and media groups worldwide,” said Genius CEO Mark Locke.

In the filing, Genius Sports also reveals the formation of Galileo NewCo, a holding company that serves as the vessel through which Genius and dMY II come together.

The betting company and the blank-check firm announced the merger last October. The transaction values the target at $1.5 billion.

Early Enthusiasm

While the Form F-4 doesn’t include a specific date on which Genius will make its debut as a public company, the data provider is already earning praise from an analyst.

In a note to clients today, Craig-Hallum analyst Ryan Sigdahl initiated coverage of Genius Sports with a “buy” rating and a $25 target. Even with today’s gain, which stands at 16.55 percent at this writing, that price target on the stock implies upside of more than 30 percent.

Citing industry tailwinds, dominant and growing market positioning, and robust fundamentals, Sigdahl calls Genius an “attractive investment opportunity.”

Genius is a “partner to over 500 sports organizations globally, including many of the world’s largest leagues and federations, such as the NBA, Premier League, FIBA, NCAA, NASCAR, AFA, and PGA TOUR,” according to the company.

Documented SPAC Success

dMY II isn’t the first SPAC rodeo for founders Niccolo de Masi and Harry You. The pair previously formed dMY Technology Group, the blank-check entity that took Rush Street Interactive (NYSE:RSI) public.

RSI debuted in late December and is up 8.59 percent year-to-date. The company was one of three from the gaming universe to go public via SPAC deals last month.

Just a handful of blank-check transactions are closed to this point in 2021, and none involve gaming companies. However, that’s slated to change, and there’s still an abundant supply of SPACs targeting gaming assets, particularly in the esports, iGaming, and sports wagering arenas.