Shares of online gambling company Rush Street Interactive (RSI) have surged nearly 60% in price over the past month as the company expands its market. However, can the stock continue to rally despite increasing competition in the burgeoning industry? Let’s find out.Online casino and sports betting company Rush Street Interactive, Inc. (RSI) made its stock market debut last December, going public via special purpose acquisition company (SPAC) dMY Technology Group, Inc. The stock has gained 59.7% in price over the past month to close yesterday’s trading session at $19.28, thanks to a series of positive developments for the company. On September 20, for example, RSI became the exclusive official sports betting partner of Magic City Jai-Alai. Also, RSI-operated BetRivers.com and PlaySugarHouse.com launched their own branded live-casino studios for Pennsylvania and New Jersey players earlier this month. However, the stock has declined nearly 11% year-to-date.
Because the NFL season is now in full swing, sports betting stocks like RSI are expected to attract increased investor attention. However, RSI faces intense competition from other players in the budding industry. Moreover, SPACs are subject to increased scrutiny from regulators. According to data from Woodruff Sawyer, shareholder lawsuits against post-merger SPACs rose to 15 through the first half of 2021, tripling from just five in 2020. In addition, according to a CFO Dive report, SPAC IPOs plunged 87% during the second quarter. Hence, RSI could also be negatively impacted.
The company reported losses in the second quarter. In addition, hedge fund interest in the stock declined recently. So, RSI’s near-term prospects don’t look very promising.