{"id":227634,"date":"2022-08-21T17:41:31","date_gmt":"2022-08-21T22:41:31","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=227634"},"modified":"2022-08-21T18:11:20","modified_gmt":"2022-08-21T23:11:20","slug":"super-group-stock-reeling-after-ebitda-adjustment-analyst-downgrade","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/super-group-stock-reeling-after-ebitda-adjustment-analyst-downgrade\/","title":{"rendered":"Super Group Stock Reeling After EBITDA Adjustment, Analyst Downgrade"},"content":{"rendered":"

The last 10 days or so have been anything but super for Super Group.<\/p>\n

\"Super<\/a>
Executives from Super Group celebrate after ringing the New York Stock Exchange bell to start trading on Jan. 28, the first day the gaming company could offer shares on NYSE. The company’s stock was recently downgraded by Oppenheimer after executives reduced its forecast adjusted EBITDA earnings for the year. (Image: NYSE\/YouTube)<\/figcaption><\/figure>\n

The Guernsey-based gaming holdings company owns Betway, a global sportsbook that partners with more than 60 sports teams and leagues. It also controls Spin, which offers real-money iGaming worldwide.<\/p>\n

\n

On Aug. 10, Super Group ended the day with its shares trading at $5.66. It had mounted a modest rally just a couple of weeks before when its shares were trading for under $4.<\/p>\n<\/div>\n

But since then, company executives have announced a massive drop in adjusted EBITDA, and one stock analyst has downgraded Super Group\u2019s stock.<\/p>\n

That led to a steady slide in the stock over the last four days of trading. Shares ended Friday going for $4.16, a 26.5% drop from the Aug. 10 close.<\/p>\n

Super Group started trading on the New York Stock Exchange on Jan. 28, just two days after finalizing a merger<\/a> with Sports Entertainment Acquisition Corp., a special purpose acquisition company. Its peak closing price was $11.05 on April 13.<\/p>\n

Blame Canada<\/h2>\n

During Super Group\u2019s Aug. 11 quarterly earnings call with analysts, CFO Alinda Van Wyk told analysts the adjusted EBITDA dropped to between \u20ac200 million (US$200.8 million) to \u20ac215 million (US$215.9 million). That was down from the \u20ac345 million (US$346.4 million) Super Group announced earlier this year.<\/p>\n

The low end of the new forecast represents a 42% decline in expected earnings before interest, taxes, depreciation, and amortization (EBITDA).<\/p>\n

The company\u2019s presentation noted a \u20ac153 million (US$153.6 million) drop in net gaming and agency revenues. That’s along with a \u20ac32 million (US$32.1 million) decrease in license revenue and a \u20ac22 million (US$22.1 million) increase in operating costs. The latter was due to the current economic climate.<\/p>\n

Van Wyk told analysts that gaming revenues went from an even split between Betway and Spin in the second quarter of 2021, to 55% coming from Betway in the second quarter of 2022.<\/p>\n

The shift in revenue mix negatively impacts our EBITDA margin, owing to Betway\u2019s lower operating margin as compared to Spin,\u201d<\/strong> Van Wyk said.<\/p><\/blockquote>\n

In the last quarter, Super Group saw Spin\u2019s revenue drop by \u20ac29 million. Most of that took place in Canada, with Van Wyk pointed to two reasons for that.<\/p>\n

\u201cPeople are getting back to normal behavior, post-COVID, and inflation is putting pressure on spending,\u201d Van Wyk said. \u201cSimilar factors can be seen in several of our markets across the globe. But the impact is felt most in Canada, as that is our largest market.\u201d<\/p>\n

Oppenheimer Analyst Concerned<\/h2>\n

Last week, Seeking Alpha reported that Oppenheimer analyst Jed Kelly downgraded Super Group\u2019s stock, namely on the news about Canada.<\/p>\n

\u201cWe are incrementally concerned around Canada, where 2Q North American revenue (-18%) and data indicate well capitalized players are rapidly gaining share in Ontario,\u201d Kelly told Oppenheimer clients, according to Seeking Alpha. \u201cWe would get more constructive on revenue acceleration from re-entering more European markets following new regulations, or better visibility into Canada.\u201d<\/p>\n

Kelly downgraded the Super Group stock to \u201cperform,\u201d similar to a hold or neutral rating.<\/p>\n

DGC Deal Still on Track<\/h2>\n

Super Group CEO Neal Menashe told analysts that the company continues to make progress on its acquisition of Digital Gaming Corp. (DGC), which owns the rights to license Betway in the US.<\/p>\n

The goal is to complete the acquisition by the year\u2019s end. DGC has Betway licensed in seven states and has market access deals in place in five more. Last week, DGC submitted its application to offer online sports betting in Ohio.<\/a><\/p>\n

\u201cDGC will be a tremendous addition to Super Group and the fastest and most efficient way for us to enter the US. We look forward to completing the regular approvals and having DGC become part of Super Group as soon as possible,\u201d Menashe told analysts.<\/p>\n

While Super Group looks to finalize the DGC deal, Menashe also told analysts that some key European markets remain \u201con hold\u201d for now. The company still awaits work from Dutch regulators, and Super Group\u2019s assessment of the \u201congoing viability\u201d of the German casino market has yet to be completed.<\/p>\n","protected":false},"excerpt":{"rendered":"

The last 10 days or so have been anything but super for Super Group. The Guernsey-based gaming holdings company owns Betway, a global sportsbook that partners with more than 60 sports teams and leagues. It also controls Spin, which offers real-money iGaming worldwide. On Aug. 10, Super Group ended the day with its shares trading […]<\/p>\n","protected":false},"author":45,"featured_media":227636,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[81887,10],"tags":[82438,82442,82441],"acf":[],"yoast_head":"\nSuper Group Stock Reeling After EBITDA Adjustment, Analyst Downgrade<\/title>\n<meta name=\"description\" content=\"On Aug. 10, Super Group shares traded at $5.66. 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