Codere Online (CDRO): A Turnaround Play in Latin American Gaming Markets

The recent resolution of Codere Online's (NASDAQ: CDRO) Nasdaq delisting threat has created a compelling entry point for investors willing to bet on its turnaround. After narrowly avoiding a June 6 trading suspension by filing its delayed 2024 annual report (Form 20-F) on June 2, 2025, the company has stabilized its regulatory standing while maintaining a strategic foothold in high-growth Latin American markets. With a Noble Capital Markets price target of $14.00—implying a 93% upside from its June 3 trading price of $7.25—and selective institutional buying, CDRO presents a risk-reward profile that merits attention.

Regulatory Overhang Lifted: A Critical Milestone

The company's narrow escape from delisting underscores its operational resilience. After receiving a Nasdaq delisting notice on May 16 for missing the April 30 Form 20-F deadline, Codere Online requested a hearing and a trading stay. By filing the report on June 2—just two days before the May 30 deadline—the company regained compliance with Nasdaq Listing Rule 5250(c)(1). This resolved the immediate threat of suspension, which would have triggered a cascading loss of investor confidence and liquidity.

The delay was attributed to prolonged audits after switching accounting firms in late 2024—a recurring challenge that had previously caused a 2023 Form 20-F delay. While this history raises concerns, the successful filing demonstrates improved execution. Investors should monitor future compliance timelines closely, but the June 2 resolution removes a major overhang.

Operational Strengths: A Latin American Growth Engine

Codere Online's core business model combines online sports betting and casino services in markets where digital adoption is surging. Its omnichannel strategy leverages the Codere Group's physical presence in Latin America—particularly in Mexico, Colombia, and Spain—to drive online engagement. In Q1 2025, net gaming revenue rose 8% year-over-year to €57.0 million, with Mexico contributing 15% growth in net gaming revenue and a 31% jump in monthly active users.

The company's focus on ESG principles, such as encouraging digital report access to reduce environmental impact, aligns with investor preferences for sustainability. While its Q1 net loss of €0.7 million contrasts with prior-year profitability, this reflects increased expenses and interest costs rather than core business weakness. Management remains confident in its 2025 outlook of €220–230 million in net gaming revenue and €10–15 million in adjusted EBITDA, which suggests a path to profitability.

Institutional Sentiment: A Mixed but Improving Picture

Institutional investors are sending mixed signals, but selective optimism is emerging:
- FNY Investment Advisers, LLC increased holdings by 15.3% in Q1 2025, valuing CDRO's compliance turnaround.
- Squarepoint Ops LLC entered the market, adding an infinite% stake (from zero).
- Funds like Renaissance Technologies and Citadel Advisors, however, exited entirely, signaling lingering concerns about governance or valuation.

The average analyst price target of $12.00 (with Noble's $14.00 being the highest) reflects cautious optimism. While short-term technical forecasts predict dips to $7.14 by mid-June, the long-term narrative hinges on Codere's ability to capitalize on Latin America's online gaming boom.

Catalysts for Rebound

1. Regulatory Certainty: The June 2 filing removes the delisting risk, allowing focus on growth.
2. Market Expansion: Latin America's online gaming sector is projected to grow at a 12% CAGR through 2030, driven by rising digital adoption and favorable regulations.
3. Share Buyback: The company's $5.0 million repurchase program—already utilizing $0.5 million by mid-May—signals confidence in undervaluation.

Risks to Consider

• Compliance Risks: Future audit delays or regulatory missteps could reignite delisting fears.
• Macroeconomic Headwinds: Economic instability in key markets (e.g., Argentina, Colombia) may curb consumer spending.
• Competitive Pressure: Rivals like Flutter Entertainment and Amaya Gaming are expanding aggressively, threatening margins.

Investment Thesis: A Contrarian Bet with Upside

Codere Online's stock trades at a 1.3x price-to-sales ratio, far below peers like Scientific Games (SGMS) at 3.5x. The $14 price target—supported by its market position and compliance resolution—suggests significant upside. While risks like regulatory scrutiny and execution remain, the risk-reward balance tilts favorably for long-term investors.

Recommendation:
- Bullish Investors: Consider accumulating CDRO at current levels, targeting the $7.00–$7.50 range.
- Risk Management: Set a stop-loss below $6.50 and monitor Q3 2025 results for EBITDA progress.

Conclusion

Codere Online's regulatory clearance and operational momentum in Latin America's fast-growing online gaming market position it as a compelling turnaround story. While risks linger, the $14 price target and selective institutional buying signal a potential inflection point. For contrarians willing to tolerate regulatory uncertainty, CDRO offers a high-reward opportunity to capitalize on a stabilized company poised to benefit from secular growth.

Final Note: Always consider diversification and consult a financial advisor before making investment decisions.