On Monday, Flutter, the parent company of FanDuel, made its debut on the New York Stock Exchange, providing U.S. investors with an alternative investment opportunity in the rapidly expanding sports betting market. This move marks a secondary listing for Flutter, which will maintain its primary listing on the London Stock Exchange and remain a constituent of the FTSE 100 index. However, with its significant revenue and growth stemming from the U.S., where FanDuel leads the market, Flutter is keen to tap into the U.S. investor base.
In the fourth quarter, FanDuel continued to demonstrate its dominance, securing a 43% market share based on gross revenue and 51% based on net revenue. Despite this impressive performance, DraftKings, its key rival, has garnered more attention in the media as the largest publicly traded pure-play sports betting company. Over the past 12 months, DraftKings’ shares have surged by over 150% and are up 9% year-to-date.
Flutter’s decision to list on the NYSE under the ticker symbol FLUT is strategic, aiming to enhance its access to capital markets and increase its visibility among U.S. investors. Peter Jackson, CEO of Flutter, emphasized the significance of this move, stating that it marks a new chapter for the company and will facilitate deeper engagement with the U.S. market.
Analysts at Jefferies view the NYSE listing as a potential short-term catalyst for Flutter. James Wheatcroft, an analyst at Jefferies, noted that FanDuel’s sustained market share outperformance could justify a 20% premium to DraftKings’ valuation. He implied a price target of £210, while Flutter is currently trading at £163 per share on the LSE.
While DraftKings has seen significant momentum since its public listing via SPAC in April 2020, achieving an all-time high in March 2021, it has trailed behind FanDuel in terms of profitability. Despite this, other competitors, such as BetMGM, Caesars Sportsbook, and newly launched platforms like ESPN Bet and Fanatics Sportsbook, are intensifying their efforts to challenge the dominance of both FanDuel and DraftKings in the U.S. market.
Flutter’s decision to delist its shares from trading on the Euronext Dublin is aimed at streamlining regulatory processes. However, the company will continue to be incorporated in Ireland for tax purposes, as stated on its website. This move renders Flutter ineligible for inclusion in the Euro Stoxx 50 index.
With the U.S. sports betting market estimated to be worth $37.5 billion, according to Jefferies, FanDuel’s CEO Amy Howe has expressed confidence in the company’s ability to compete effectively against well-capitalized rivals. She emphasized the importance of scale and product distinctiveness in maintaining FanDuel’s competitive edge.
Flutter’s listing on the NYSE reflects its strategic focus on the U.S. market and its determination to challenge DraftKings’ dominance, setting the stage for an intriguing battle in the rapidly evolving sports betting industry.
(Source: Barron’s | The Guardian)
