Flutter Entertainment Stock Falls As FanDuel Parent Cuts Guidance

Flutter Entertainment Plc (FLUT), the parent company of FanDuel, has seen its stock price take a hit after announcing a cut to its near-term guidance due to "very unfavorable" sports results. The company, which operates one of the leading online sports betting and iGaming platforms, attributed the reduction in guidance to a period of adverse betting outcomes, particularly in the U.S. market.

In a statement released after the market close on Tuesday, Flutter Entertainment revealed that strong U.S. customer momentum had been offset by unfavorable betting results, which accounted for an estimated adverse gross gaming revenue impact of $438 million and estimated reductions in revenue of approximately $390 million. The company also noted that adjusted EBITDA took a hit of approximately $260 million for the period from November 12, 2024, to December 31, 2024.

As a result of these unfavorable sports results, Flutter Entertainment now expects 2024 revenue of approximately $5.78 billion, down from previous guidance of $6.05 billion to $6.25 billion. Fourth-quarter revenue is now expected to be approximately $1.59 billion. Full-year adjusted EBITDA is expected to come in at approximately $505 million, down from previous guidance of $670 million to $750 million. Fourth-quarter adjusted EBITDA is now expected to be approximately $161 million.

Despite the short-term setback, Flutter Entertainment remains confident in its long-term growth trajectory, as communicated at its Investor Day in September 2024. The company noted that outside of the U.S., it is expected to exceed midpoints of guidance due to favorable sports results in the English Premier League. The company now expects 2024 revenue to be 1% higher than the midpoint of previous guidance and 2024 adjusted EBITDA to be approximately 2% higher.



Flutter Entertainment is scheduled to report fourth-quarter earnings on March 4, 2025, at which time it will provide formal guidance for 2025. Investors will be closely watching the company's performance and any updates to its guidance as the sports betting and iGaming market continues to grow and evolve.

In conclusion, while the recent guidance cut by Flutter Entertainment is a short-term setback, the company's long-term growth trajectory remains intact. Investors should consider the strong U.S. customer momentum, international performance, market growth potential, and competitive landscape when reassessing Flutter's investment potential. The volatile nature of sports betting outcomes requires investors to evaluate the sustainability of the company's business model and revenue streams, but Flutter's ability to manage risk and adapt to volatile sports betting outcomes suggests that its business model remains robust.