JPM: FanDuel Targets Future Growth, Regrets Insufficient Past Investments   

JMP Securities analysts said that FanDuel regrets not investing more in customer acquisition, according to a NEXT.io report. Representatives of the investment group met with FanDuel executives over dinner, discussing a number of relevant topics.

FanDuel Believes It Should Have Invested More in Acquisition

As reported, FanDuel’s chief financial officer, David Jennings, and Flutter’s director of investor relations, Ciara O’Mullane, believed that the operator brand should have invested much more in the acquisition of new users in the past. Jennings attributed this mistake to the lack of foresight, saying that if the company knew what it does now, it would have “spent a considerable more amount of money.”

FanDuel’s decision to scale back the financing of customer acquisition followed a larger trend that saw operators prioritize profitability instead. However, the company’s executives feel that FanDuel should have invested more in player acquisition, despite its EBITDA loss of $552 million in 2021-22.

JMP reflected on the matter, saying that this attitude is exemplary of FanDuel’s 2024 outlook as the company continues to prioritize investment. Still, the investment firm noted that FanDuel will increase its spending only when it makes sense.

FanDuel Views Its Position as a Baseline

JMP’s analysts also addressed FanDuel’s ongoing investments, saying that the company seems to be focused on higher adult penetration rates in the wake of new US market launches. The investment firm added that FanDuel has been quite successful in channeling bettors toward high-margin products.

In the meantime, FanDuel is likely to consider a reduction in the cost of its US payment processors, in line with the strategies of some of its competitors. JMP believes that the operator has had approximately $500 million of processing fees in 2023.

In the meantime, FanDuel is bolstering its iGaming efforts, seeking to make further strides in the sector. The company’s iGaming market share experienced a significant increase since 2021 and was standing at 26% in 2023. Jennings attributed this growth to the capabilities of Flutter’s global casino platform.

JMP’s analysts were under the impression that FanDuel views its current state as a “baseline” for the future.

Speaking of the future, JMP believes that FanDuel’s next moves may include investments in Brazil and M&A activity in the region.