Stocks Tracker: Q3 results ramifications as listed firms lament margin malaise

EGR analyses the share price movements of major industry players in November, including Better Collective, Catena Media and Entain  

Entain

1 November closing: 940p

30 November closing: 802.80p

Peak November closing: 958p

The start of November marked a significant drop in Entain’s share price following the release of the FTSE 100 giant’s Q3 trading update. The group’s stock fell from a previous close of 940p to finish Thursday 2 November at 884.40p as the market reacted to a 5% pro forma year-on-year (YoY) decrease in group NGR.

The trading update confirmed Entain’s brief note supplied to the market in September that it was expecting a “softer than anticipated” quarter. Regulatory headwinds, namely in the UK and Germany, have proven difficult to weather, and while its US JV BetMGM continues to be a shining light in the group, it has lost ground to FanDuel and DraftKings stateside.

The operator also confirmed the launch of ‘Project Romer’ to initiate gross cost savings of £100m by 2025, while focusing on growth markets such as Brazil and exiting “non-core operations” in Africa.

Entain’s share price did recover by Wednesday 8 November to a monthly high of 958p, corresponding with chair Barry Gibson and CEO Jette Nygaard-Andersen increasing their shareholding in the company in a sign of resolute confidence.

However, that peak soon gave way to another dip. The Financial Times reported that two US activist hedge funds are now agitating behind the scenes, with the report noting that Nygaard-Andersen has come under increasing pressure to arrest the slipping performance.

The month closed out with Entain confirming a £585m settlement with HMRC over allegations of bribery relating to its previously owned Turkey-facing business, while also pledging to donate £20m to charity and £10m in costs.

The announcement, which came on Friday 24 November, did not see the group’s share price plummet, with the news having been anticipated for months. Entain’s stock did still fall slightly from 864.40p to 859p.

Catena Media

1 November closing: SEK17.20

30 November closing: SEK11.92

Peak November closing: SEK17.20

It has been a difficult year for Catena Media but there are hopes 2024 will be more comfortable following the completion of the group’s strategic review which has seen focus firmly shift to the US. November marked the end of that review with the sale of Catena Media’s Italian assets to Oddschecker and another unnamed buyer for a total consideration of €19.8m.

During the review, the firm offloaded its UK and Australian assets, along with its former flagship brand, AskGamblers, to GiG for €45m. The review saw the company raise €76m, while costs have been cut by up to €4.2m as a result. However, the news did little to improve the firm’s stock, which has fallen by almost 40% since 1 January.

Tuesday 21 November saw Catena Media confirm the sale of its Italian assets, while also reporting a 28% YoY decline in revenue to €15.9m. Adjusted EBITDA sank 65% to €3.1m as new depositing customers also dropped YoY.

With focus shifting to North America, operations from the region still posted a 29% decrease in revenue during the reporting period to €13.3m. Despite this, CEO Michael Daly said the group is ready to “devote our full resources and attention to capturing the long-term growth opportunity we see ahead”.

Although Daly was optimistic, Catena Media’s share price sank from a previous close of SEK16.01 to SEK12.60 following the publication of the results and completion of the strategic review. A plateau for the remainder of the month on the stock market saw the group close out November with shares worth just SEK11.92 a piece.

Better Collective

1 November closing: SEK273

30 November closing: SEK238

Peak November closing: SEK286

A strong start to November for affiliate giant Better Collective eventually slipped into decline as the group’s Q3 trading update could not abate previous shareholder excitement over a major M&A move.

On Tuesday 7 November, the Danish firm announced a cash-plus-share deal to acquire Toronto-based digital media company Playmaker Capital for a total consideration of €176m. The deal, which is the second-largest acquisition in Better Collective’s history, includes Latam-facing Futbol Sites, US-based Yardbarker and Canada-facing The Nation Network. The move was marked as “transformational” by company management, with completion pegged for Q1 2024.

The market reacted positively to the news, sending Better Collective’s share price up from a previous close of SEK274.50 to SEK286 – which represented a November high on the stock market for the group. A slight decline to SEK267.50 as of Wednesday 15 November would be as good as it got for the remainder of the month, however.

Despite Better Collective reporting a 26% YoY jump in revenue during Q3, coupled with a 35% rise in EBITDA, the market failed to react, with concerns over sports betting margins in Q4 and the continued shift to revenue share in the US the major flags.

The group’s stock fell to SEK220.50 as a result, before bottoming out for the month the following day at SEK219. At the time, Better Collective CEO Jesper Søgaard said: “I would like to stress that this transitional phase will continue to have a short-term dampening impact on our financial performance in the coming quarters, also heading into 2024.

“However, given the above-mentioned factors, this is something we must see through, as it simply is not an opportunity we want to miss out on,” he added.

The group’s stock did recover slightly throughout the remainder of the month, closing out November at SEK238.

 

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