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@WallStCynic
Oct 1, 2020 • 7 tweets • 2 min read • Read on X
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You People Have Lost Your Damn Minds Dept: All gambling revenues(casino, online, sports, pari-mutuel, Native American, etc.) in the USA will probably be less than $80B in 2020, growing 2% per year. Sports betting(less than $2B) is about 2% of the total.
(2) William Hill, the dominant UK online and sports betting platform is being bought for 2x revenue, and has 15% EBITDA margins.
(3) In 2016 the total UK sports betting “handle” (online and on-premise) was $12.3B, or less than 0.5% of GDP, and has NOT been growing. The same figure would be a handle of less than $100B in the US.
(4) For the LTM the Nevada sports betting “win” (revenue/handle) was 6% (online only 4%!).
(5) Here is the NJ online sports betting figures from last year’s football season(2019). A handle of $3.1B with the 7% win percentage.
(6) So...If we become a nation of mad sports punters (bettors) like the UK, which has had online gaming for years, the US sports betting handle might be $100B. This would yield a TAM of $5–10B, depending on your view of win %. Competition will probably keep it lower, not higher.
(7) With 20% EBITDA margins, which is generous given all the marketing spend we all see, the ENTIRE pre-tax profit pool is probably $1-2B at market maturity. Obviously, sports betting is not the story here. Online casino games is.

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More from @WallStCynic

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Feb 29
I saw another “strategist” on FinTV this morning trying to compare today’s market environment to 1995, claiming ChatGPT’s introduction was akin to the 1994 unveil of Netscape. Similar to late-1994 the NASDAQ has doubled over four year since its lows in 1990 and 2020.
(2) And in late-1994, Fed Funds were at 5.5%, similar to today. The inflation rate in 1995 was 2.8%, also similar to today. But that’s where the similarities end. At the end of 1994 the S&P 500 was trading at 12x 1995 EPS. Versus 22x the 2024 estimate today.
(3) But the real comparison problem is in the size of the US stock market relative to US GDP. In late-1994 the US stock market had a $5.0T capitalization, relative to a $7.6T GDP, or 66%. Today? A $53.0T capitalization on GDP of $27.4T, or 193%! Almost 3x.
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Jun 27, 2023
I find myself agreeing with a good friend who observes that more and more announced commercial RE deals are hiding important terms below the surface, so as to maximize the headline valuation. $SLG’s 245 Park is a good example of this, as are recent data center deals.
@StanphylCap (2) Look at $SLG’s LTM capex of $300M (consolidated only). That’s basically 100% of D&A, and 33% of annualized consolidated revenues! It’s also over 3% of gross PP&E. Makes a “4 cap” insane ($SLG trades at an implied 6 cap).
This crib sheet (Ht: @assouline99) on the latest rumors on the $DLR Chicago sale is a perfect example of what I’m talking about. Guarantee a minimum return to the buyer and retain an equity stake…and voila, a lower “stated” cap rate!
Read 4 tweets
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Apr 20, 2023
And with gross and operating margins higher than $TSLA, Mercedes doesn’t seem to be “disrupted”, does it? #ProfitableDinosaur Image
(2)Toyota…? Nope. Their operating margin (9% last FY) is improving. $TSLA Image
(3) Not even staid old VW Group with their 8% operating margins. $TSLA Image
Read 5 tweets
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Apr 19, 2023
Remember that $TSLA Megapack energy storage pump a few moths ago? Well GWh installed were up a lot sequentially(3.9 vs 2.5, Q/Q), but gross profits not so much($159M to $168M, Q/Q). Gross margins in that segment dropped to below 11%.
(2) And $TSLA Automotive Gross Profit/Unit is back to 2019 levels. And that’s before the April price cuts. Image
(3) And the overall $TSLA operating margin (ex-tax credits) of 9.4% is now approaching the level of the other auto OEM’s they are supposedly “disrupting”. Further price cuts will hurt Tesla as much/more than the competition, at this point.
Read 4 tweets
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Mar 15, 2023
Can someone explain the valuation discrepancy between cash-burning legacy data center operator $DLR,and it’s affiliated Singapore-listed REIT, $DCRU.SP…? DCRU owns the exact same type of data centers as its parent, yet is much cheaper. It trades at almost a 9 cap vs 5 for $DLR!
(2) As for yield, $DLR yields 4.6% vs 8.0% for $DCRU.SP. Again these are the same type of global legacy data centers (DCRU is not just Asian DC’s) in both portfolios, so this is a direct comp. REIT investors, can you help me out here?
(3) And given the reports of numerous data centers up for sale (particularly from private owners), to raise cash, it remains to be seen how long $DLR and $EQIX can keep their towering valuations of 4-5 caps and 100x EPS. Private sales at 8-9 caps are coming soon…
Read 7 tweets
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Jan 24, 2023
The $GE 4Q press release only has 18 pages of adjustments. Post-spin, 2023E guidance for “Adjusted EPS” of $1.60 to $2.00 is well below estimates($2.40).
(2) And they cut the “Crown Jewel” (Aerospace) guidance for 2023 Segment Operating Profit from $6.0B to $5.3-5.7B.
(3) In fact, the $GE RemainCo guidance cuts are even more substantial than they appear on the surface. See below:
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