Flutter Entertainment shares rally ahead of U.S. listing
Shares in Flutter Entertainment rallied in London on Thursday ahead of a planned U.S. stock-market listing, even as the FanDuel owner warned that a string of sporting results in customers’ favor will result in lower-than-planned revenue.
Flutter Entertainment shares
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rallied 11%, ahead of a U.S. listing planned for Jan. 29 on the New York Stock Exchange. Flutter plans to retain its primary London listing but will delist from Euronext Dublin.
“Excitement about the company’s imminent U.S. stock market listing and commentary around continued momentum in the business allowed investors to look past a hit from customer-friendly sporting results in the U.S. at Flutter Entertainment,” said Russ Mould, investment director at AJ Bell.
“The hope will be the company, whose strategy is heavily oriented to capitalizing on an emerging opportunity in the U.S., can attract a higher valuation off the back of its U.S. listing. The legalisation of sports betting across much of the U.S. has created a huge new market which many U.K. bookmakers are looking to tap into, to varying degrees of success.”
Flutter said FanDuel retains its “clear number one sportsbook” in the U.S. during the fourth quarter. The rival to DraftKings
DKNG,
Penn Entertainment
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and others said fourth-quarter U.S. revenue will be $225 million lower than previous guidance, at $1.42 billion.
Flutter did say it was pleased with its U.S. sportsbook gross revenue margins of 13.5%, up by 2.2 percentage points from last year. “We’ve been growing over the years our expected margin, and that’s the capabilities that we have in risk and trading, the very strong market share that we have in the parlay product, which we are really the most famous for, and that does have a high margin for us,” said CFO Paul Edgecliffe-Johnson on an analyst call, according to a FactSet transcript.
“Q4 and Q1 are the biggest sports quarters, as you know, and the biggest in the sports that we are biggest in, so they are our best quarters from a margin perspective. It won’t be a performance that we can replicate every quarter, certainly not at the moment, and we’ll have to see what happens in the first quarter.”
Flutter also said its ex-U.S. trading was in line with guidance.
Flutter said it can’t give forward guidance until its registration statement is approved by the U.S. Securities and Exchange Commission. It then plans to report results in U.S. GAAP rather than IFRS.