New York, NY – Genius Sports (NYSE: GENI) reaffirmed its 2024 financial guidance on Wednesday, though its stock took a hit following news of a share sale.
In late trading, Genius Sports shares fell 4% on double the daily average volume after the company announced it would sell 16.47 million shares at $8.50 apiece. The offering, expected to close at the end of US markets on Thursday, is priced about 35 cents below the stock’s current trading value.
> “The Company estimates the net proceeds from the offering will be approximately $144 million, after deducting underwriting commissions and estimated offering expenses. The Company currently expects to use the net proceeds from this offering for general corporate purposes, which may include acquisition or investment in complementary businesses, technologies, or other assets,” according to a press release.
Genius Sports, previously involved in consolidation rumors, cautioned investors that no acquisition agreements are in place. Large investors such as Caledonia and Wellington Management are participating in the sale.
Solid Financial Guidance
Two months ago, Genius Sports reported it anticipated 2024 sales of $511 million with earnings before interest, taxes, depreciation, and amortization (EBITDA) of $86 million. The company reaffirmed these estimates, which indicate a 24% growth in revenue and a 61% increase in EBITDA. The upgraded outlook points to 2024 as the fourth consecutive year of at least 20% top-line growth for the company.
Genius Sports also projects being net cash positive for 2024, with an increasing cash position.
> “Additionally, the Company reported its preliminary unaudited estimate of cash, cash equivalents, and restricted cash as of December 31, 2024, of approximately $135 million, which is expected to be up from $69 million as of September 30, 2024, and up from $126 million as of December 31, 2023. This equates to a positive net cash position for 2024 as previously disclosed as part of our 2024 guidance,” the statement said.
Importance of Genius’ Cash Position
Should Genius Sports meet or exceed the $135 million cash estimate, it may suggest the stock is undervalued relative to the company’s liquidity. This amount represents a significant percentage of the company’s market capitalization of $1.93 billion.
The stock is favored on Wall Street, with 11 out of 12 analysts rating it as a “buy” or “strong buy,” while one has a “hold” rating. The consensus price target is $11.50, implying a potential upside of about 30% from current levels.
Genius Sports has established data agreements with premier sports organizations, including the NCAA, NFL, English Premier League (EPL), and Germany’s Bundesliga.
