Entain shares plummet as a result of disappointing Q3

Lea Hogg September 26, 2023

Entain is responding swiftly to its disappointing Q3 2023 financial results. The company reported a less-than-stellar performance in its online Net Gaming Revenue (NGR) following the summer season. With Q3 2023 online NGR growth expectations in the high single digits and proforma NGR facing a similar decline, Entain is challenged with multiple factors contributing to this setback. These include adverse sporting results, the ongoing implementation of safer gambling measures, regulatory hurdles and slower-than-expected growth in Australia and Italy. As a result of these challenges, Entain’s shares plunged by over 8 percent this week.

Bright outlook for acquisitions and retail segments

Despite the hurdles, Entain’s recent acquisitions have resulted in a positive impact, particularly SuperSport in Croatia. The retail segment also delivered robust performance, with BetMGM in the US staying on course to deliver positive EBITDA in H2 2023.

Long-term growth

Over the past three years, Entain has been actively reshaping its strategic approach to enhance earnings quality and deliver long-term shareholder value. With a shift from a brand-focused approach to a regional strategy, Entain is prepared for potential senior position eliminations and organizational restructuring. To accelerate performance and delivery, the company plans a comprehensive market review with an emphasis on sustainable organic growth. Additionally, Entain aims to streamline its group structures, migrate acquired businesses to its advanced technology platform, optimize capital allocation and move closer to achieving a 30 percent online EBITDA margin target.

Resilience and adaptive strategies

Research Analyst Neil Shah, director at Edison Group, acknowledged Entain’s challenges but also recognized the company’s resilience and adaptive strategies in navigating the ever-evolving online gaming landscape. In H1 2023, Entain demonstrated impressive growth, with an 11 percent rise in overall NGR and significant surges in online revenue. The operator’s commitment to cost-cutting, efficiency and optimized capital allocation positions it for future success. While Entain faces uncertainties, investors and analysts like Peel Hunt maintain a positive outlook, highlighting the company’s leading position in the US market through BetMGM and its untapped potential from recent acquisitions. Peel Hunt reiterated its Buy rating for Entain stock with a slightly adjusted target price. Entain Plc (ENT.L) is currently trading at GBp929.00 (-1.20 percent).

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