Sportradar Slumps in Stock Market Debut on Bad Day for Gaming Equities

Posted on: September 14, 2021, 10:17h. 

Last updated on: September 15, 2021, 08:58h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Sportradar (NASDAQ:SRAD) shed 7.22 percent in its first day as a publicly traded company on volume of 12.82 million shares.

Sportradar IPO
Sportradar executives and investors get ready to ring the opening bell at the Nasdaq. The betting data provider went public today. (Image: Nasdaq)

Earlier Tuesday, the sports betting data provider priced its initial public offering (IPO) at $27 a share, after marketing the issue in the $25 to $28 range. That raised more than $670 million, while briefly giving the Switzerland-based company a market capitalization of around $8 billion. The shares closed at $25.05 after trading in an intraday range of $24.20 to $27.03. Sportradar sold 19 million shares at $27 apiece.

In addition, Carsten Koerl, Sportradar’s founder and CEO, has granted the underwriters a 30-day option to purchase up to an additional 2,850,000 Class A ordinary shares at the initial public offering price,” according to a statement.

Timing wasn’t in Sportradar’s favor, as it made its Nasdaq debut on a day of broad weakness across the gaming complex. Shares of some casino operators were drubbed amid concerns of emerging regulatory overhangs in Macau, while traders took profits in recent hot sports betting equities.

Sportradar Still Has Bright Future

Obviously, one day doesn’t determine any company’s long-term fortunes. That’s true of Sportradar, though its opening market value of $8 billion was below the $10 billion to $12 billion valuation the company reportedly was seeking when rumors about it going public initially surfaced in mid-2020.

The Sportradar IPO will test investors’ confidence in newly public companies with ties to sports wagering. While data confirms the growth of the US sports wagering market, plenty of recent IPOs in the space are scuffling.

Despite the first day slump, Sportradar comes public at an opportune time. Sportsbook operators’ data demands are swelling, and 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.

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 purveyed by Sportradar and its rivals.

Think Software

While many investors are apt to view Sportradar as a back end play on sports wagering, the company wants to be viewed in a different light. In an interview with Barron’s, Koerl said, “We’re a software play.”

That’s not necessarily wishful thinking on the chief executive’s part. In a recent note on Genius Sports (NYSE:GENI) — one of Sportradar’s most direct competitors — an analyst said that company should be valued in similar fashion to a software as a service (SaaS) stock.

With an opening market capitalization of $8 billion, Sportradar sports a valuation more than double that of Genius.