Analyst forecasts BetMGM loss now, profit soon

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Tomorrow’s earnings update from BetMGM will be a “material catalyst” for shares of co-parent Entain, according to Jefferies Equity Research analyst James Wheatcroft in a February 2 investor note.

Wheatcroft began by observing that Entain shares were down 15% since mid-December. He predicted that BetMGM, jointly owned with MGM Resorts International, will post losses in the vicinity of US$30 million, down from last fiscal year’s US$250 million, “with ongoing underlying trading momentum allowing BetMGM to prioritize profitability.”

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The analyst also foresaw BetMGM pivoting to profits in 2026, to the tune of US$140 million. That would grow even further in 2027, reaching US$300 million. He added that customer acquisition costs would be critical to any profit margin this year.

While allowing that BetMGM has not always provided earnings guidance at such junctures, Wheatcroft said he expected some for the 2025 fiscal year. He cited momentum of late, as well as a US$500 million cash flow forecast (“in the coming years,” according to company management) given last July.

Wheatcroft wrote that his forecast fell in line with analysts’ consensus, which showed US$250 million in red ink narrowing to as little as US$5 million this year. “We do envisage a tension: BetMGM wanting to demonstrate profit progress versus investing behind emerging product traction,” he added.

The analyst concluded that BetMGM would prioritize sheer profit. Ergo, he stuck with his projection of a US$30 million loss.

Even so, Wheatcroft noted recent adversity for the igaming and sports betting provider. Its market share fell from 14% to half that in the fourth quarter of 2023. “However, the integration of Angstrom tech through 2024 helped deliver consistent sequential improvements, with quarterly handle growth,” he continued.

BetMGM market share grew 12% in the third quarter of last year, Wheatcroft wrote, then by 32 percent in the final quarter. “This strong finish to the year … helped BetMGM deliver stable 4Q24 market share at 20.8%,” even as rival DraftKings lost share, the analyst recorded.

“As a result,” Wheatcroft concluded, “BetMGM exits 2024 having overtaken DraftKings to become the #2 igaming brand and having delivered its highest growth in almost three years.”