As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the gaming solutions industry, including Light & Wonder (NASDAQ: LNW) and its peers.
Gaming solution companies operate in a dynamic and evolving market, and the digital transformation of the gaming industry presents significant opportunities for innovation and growth, whether it be immersive slot machine terminals or mobile sports betting. However, the gaming solution industry is not without its challenges. Regulatory compliance is a crucial consideration as companies must navigate a complex and often fragmented regulatory landscape across different jurisdictions. Changes in regulations can impact product offerings, operational practices, and market access, requiring companies to maintain flexibility and adaptability in their business strategies. Additionally, the competitive nature of the industry necessitates continuous investment in research and development to stay ahead of competitors and meet evolving consumer demands.
The 7 gaming solutions stocks we track reported a slower Q3. As a group, revenues were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady as they are up 2.1% on average since the latest earnings results.
Light & Wonder (NASDAQ: LNW)
With names as crazy as Ultimate Fire Link Power 4 for its products, Light & Wonder (NASDAQ: LNW) is a gaming company supplying the casino industry with slot machines, table games, and digital games.
Light & Wonder reported revenues of $841 million, up 2.9% year on year. This print fell short of analysts’ expectations by 1.1%. Overall, it was a mixed quarter for the company with a decent beat of analysts’ adjusted operating income estimates but a miss of analysts’ Social Gaming revenue estimates.
Interestingly, the stock is up 23.9% since reporting and currently trades at $90.91.
Is now the time to buy Light & Wonder? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Rush Street Interactive (NYSE: RSI)
Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE: RSI) is an operator of digital gaming platforms.
Rush Street Interactive reported revenues of $277.9 million, up 19.7% year on year, outperforming analysts’ expectations by 4.3%. The business had a very strong quarter with an impressive beat of analysts’ adjusted operating income estimates and a beat of analysts’ EPS estimates.
Rush Street Interactive scored the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.1% since reporting. It currently trades at $17.28.
Is now the time to buy Rush Street Interactive? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: PlayStudios (NASDAQ: MYPS)
Founded by a team of former gaming industry executives, PlayStudios (NASDAQ: MYPS) offers free-to-play digital casino games.
PlayStudios reported revenues of $57.65 million, down 19.1% year on year, falling short of analysts’ expectations by 3%. It was a disappointing quarter as it posted a miss of analysts’ daily active users and adjusted operating income estimates.
PlayStudios delivered the slowest revenue growth in the group. The company reported 2.21 million monthly active users, down 25.3% year on year. As expected, the stock is down 20.5% since the results and currently trades at $0.72.
Read our full analysis of PlayStudios’s results here.
DraftKings (NASDAQ: DKNG)
Getting its start in daily fantasy sports, DraftKings (NASDAQ: DKNG) is a digital sports entertainment and gaming company.
DraftKings reported revenues of $1.14 billion, up 4.4% year on year. This print came in 5.6% below analysts' expectations. Overall, it was a softer quarter as it also logged full-year revenue guidance missing analysts’ expectations significantly and full-year EBITDA guidance missing analysts’ expectations significantly.
DraftKings had the weakest performance against analyst estimates and weakest full-year guidance update among its peers. The stock is up 6.6% since reporting and currently trades at $29.80.
Read our full, actionable report on DraftKings here, it’s free for active Edge members.
Accel Entertainment (NYSE: ACEL)
Established in Illinois, Accel Entertainment (NYSE: ACEL) is a provider of electronic gaming machines and interactive amusement terminals to bars and entertainment venues.
Accel Entertainment reported revenues of $329.7 million, up 9.1% year on year. This result surpassed analysts’ expectations by 0.5%. Zooming out, it was a satisfactory quarter as it also produced a beat of analysts’ EPS estimates but a miss of analysts’ adjusted operating income estimates.
The stock is up 3.7% since reporting and currently trades at $10.29.
Read our full, actionable report on Accel Entertainment here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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