Posted on: December 13, 2021, 12:23h.
Last updated on: December 13, 2021, 12:37h.
Sportradar (NASDAQ:SRAD) doesn’t book bets. But some market observers view it is one of the prime avenues for investors looking to participate in the growth of the regulated sports wagering industry.
The Swiss company went public in mid-September raising $670 million in an initial public offering (IPO) that briefly valued the company at $8 billion. Since then, it’s followed other sports betting betting equities lower, and now has a market capitalization of $5.65 billion. But that slump could be a buying opportunity due to an impressive growth trajectory.
Revenue has been growing at a 30 percent annual clip, as the company serves a global sports betting market that could reach $70 billion by the end of the decade,” reports Barron’s.
Sportradar is piecing together an impressive portfolio of deals with leagues, potentially making its data all the more essential to gaming companies. The company provides data on over 80 sports across 150 leagues in 120 countries. Those relationships include the NBA, MLB, NHL, FIFA, and NASCAR.
US Allure for Sportradar
Sportradar provides data to sportsbook operators — an essential part of the wagering equation, particularly as the industry expands in the US.
Investors that are bullish on the sports betting data space contend that, as regulated sports wagering grows, sportsbooks will be compelled to pay up for the premium data offered by Sportradar. They also say that the companies are tethered to what could be exponential growth in the in-game wagering market. The company usually takes one percent to two percent of the handle per game, but it’s looking for ways to boost that percentage.
Sportradar is looking to increase “its take-rate above 13% by delivering other services, including ads, live video feeds, and odds for each player’s points, penalties, and substitutions.” according to Barron’s.
Additional services turning into revenue enhancers are among the reasons why analysts are enthusiastic about Sportradar stock. For example, JPMorgan’s Daniel Kerven estimates the company can grow its top line at 20 percent annually to get to $1.3 billion in 2025.
Buoyant Growth Outlook, But Challenges Linger
While Sportradar is a newly public enterprise, there’s already chatter in the analyst community that these firms should be valued in similar fashion to software as a service (SaaS) stocks. Those are richly valued equities with high growth rates.
That comparison is compelling. But some market observers fret over the prices Sportradar and rival Genius Sports (NYSE:GENI) pay to obtain data deals with leagues. For example, the NBA is getting three percent of Sportradar equity through a data accord announced last month.
Additionally, some investors point to some sportsbook operators seeking vertical integration and bringing technology in-house. That means those operators are unlikely to become Sportradar (or Genius) clients.
Conversely, Goldman Sachs believes the growth of sports wagering will outpace that of e-commerce, rising to $39 billion in 2033. That indicates there’s a potentially long runway for growth ahead for Sportradar.