City analysts are still backing Genius Sports despite the firm’s stock falling and various investment firms lowering their target prices on Q3 results.
The NYSE-listed sportstech group reported strong results in the quarter, raising its yearly revenue guidance to the $1bn mark with adjusted EBITDA expected to stand at $287m/$297m.
The positive outlook is underscored by the firm doubling its Q3 revenues to $270m and adjusted EBITDA to $87m. Further positives see leadership point to a period cash-flow of $54m, as CEO Matt Locke proclaims “Genius is demonstrating its cash-generating power”.
Statements and metrics should please investors, yet Goldman Sachs, Stifel and Oppenheimer dropped their target prices on the company after these results, while Genius’ stock fell from over $7 to under $6 in the day following the release.
The good vibes of Genius are not being heard by the markets. This raises the question of what is spooking optimism of the group, as it moves to expand its business into iGaming media and continues its aggressive commercialisation in US wagering.
Perhaps as a key tech, data and content supplier, Genius is too exposed to the whims of the betting market, as clients feel the drags of cost controls and revise expenditures.
Macquarie sees the light
Investment banking conglomerate Macquarie Group stuck with its current $11 target price. However, it lowered its 2026-2028 expected EBITDA forecasts slightly, but the business believes Genius is still “fishing well in a very stocked river”.
The business lowered its annual EBITDA expectations from $292m, $407m and $515m to $290m, $385m and $507m.
“Our updated estimates remain conservatively below consensus expectations,” said Macquarie’s latest note, which was shared with SBC News.
“While investors focus on slowing sports betting handle growth and prediction market risks (cannibalisation and regulation), we believe Genius is uniquely positioned to benefit from either outcome through its participation in customer acquisition, liquidity/trading, and settlement.
“If the NFL adopts a more favorable view of prediction markets, similar to league relationships already established with MLB, NHL, Serie A, Liga MX, and MLS, upside to current expectations could be significant, in our view.”
Analysts Chad Beynon, Aaron Lee and Sam Ghafir made reference to the fact that commentary in the aftermath of the results – on Genius’ investor call – was largely positive as the firm builds momentum in the prediction markets scene following deals with Kalshi and Polymarket.
Of note, investors are seeing early synergies from UK-headquartered Genius’ $1.1bn acquisition of Legend – the root cause of the company’s stock market plight earlier in the year.
Macquarie analysts continued: “Yet FY26 guidance rose only by the Q3 beat: $10mn revenue/$2mn EBITDA. We view management as conservative.
“At around 6x next-12-month EBITDA, Genius could deliver one of our coverage’s largest Q4 beats.”
External factors a worry for Genius investors
Investors are however, expectedly, concerned about revenue drivers at Genius.
Slowing sports betting handle growth and legal issues around prediction markets are expected to provide headwinds in the future for the business.
Macquarie also views the business as working in a “quasi duopoly” alongside Sportradar, with both companies benefiting from the growth of the two sectors above.
That does not mean there isn’t fierce competition between the two, with both racing to secure deals with various major leagues and organisations.
And while both have secured deals with Kalshi and Polymarket as they look to capitalise on prediction markets, Macquarie views Genius’ recent focus on the industry as beneficial either way.
Macquarie’s note read: “Agreements now cover Kalshi, Polymarket, and major market makers, which need real-time official data. This expands Genius’ long-term total addressable market; management is agnostic on wagering volume sources.”
One thing rings true for both Genius and Sportradar though – their stocks are trading way off the price they once were upon their respective 2021 IPOs.
For Genius, there’s still plenty more to be done to prove to investors that the business, and maybe even the “quasi duopoly”-style sports data providing sector itself, is an attractive one long term amid serious current and future pressure on the industries it relies heavily on.
