Caesars Stock Shines Following Q4 Earnings Report
The sports betting stock sector has been on the wrong end of the PR wire recently, but a promising quarterly report has seen Caesars Entertainment (CZR) trend and trade up 5% Wednesday’s premarket trading session.
Caesars had made their quarterly financials public yesterday evening, and early reports suggest that the brand’s ability to curb its advertising and customer acquisition cost excited investors who have come to view the casino/gaming sector as one that spends somewhat irresponsibly.
Caesars is now operational in 22 states in the US, and last year’s acquisition of William Hill helped to bolster the company’s online reputation and technological footprint. This growth has come as a surprise to many in the space who often viewed the brand’s online aspirations as a longshot.
Over the last month, Caesars Entertainment has captured 21% of the US sports betting market, and the group is quickly proving that it can be a true contender in the battle for online gambling supremacy. Leave it to one of Las Vegas’s most recognizable brands to defy the odds and prove itself to be a worthy competitor in the online gaming space.
Caesars CEO Tom Reeg directly addresses the company’s plans to limit the excessive spending practices that have clearly spooked investors of other sports betting stocks.
“You are going to see us dramatically curtail our traditional media spend effectively immediately. We have accomplished what we set out to do. We set out to become a significant player, and it’s happened significantly quicker than we thought.”
To put things into perspective, DraftKings reportedly spent in excess of $1 billion in sales and marketing last year alone. This more than doubled the total spent in 2020 and is expected to be even higher in 2022.
Sticking with the DraftKings comparison, Caesars has also seen its own share of downward trends this year in relation to stock share pricing. However, the 18% dip in share value seen by Caesars is a bit more digestible than the 30%+ dip DraftKings has seen over the same timeframe.
We all remember the DFS days where FanDuel and DraftKings fought to put a logo on just about anything that would accept one, and quite frankly… it was extremely annoying.
I’m not taking this as an opportunity to be critical of the brand or its product, but one could easily argue that these brands are becoming somewhat intrusive with their advertising in a way that paints themselves in a negative light.
Caesars is proving that success can come at lower costs, and investors are wising up to the fact that brands that can manage their own money are better suited to deliver returns for those looking to invest their own as well.