Wall Street Breakfast: Ready For Kickoff

Ready for kickoff

The NFL season will begin tonight with the defending Super Bowl champion Kansas City Chiefs playing the Detroit Lions at 8:20 PM ET. It will be front and center for the sports betting industry, which will continue to watch pro football matchups until the Super Bowl in Las Vegas on February 11, 2024. Ahead of the first kickoff, an annual survey released by the American Gaming Association forecast a major increase in the number of people making bets during the 2023 NFL season, with 73.5M U.S. adults placing wagers this fall and winter vs. 27M adults in 2022.

The league: The new season begins with FanDuel (OTCPK:PDYPY) and DraftKings (DKNG) holding the top spots in the sports betting market, with their shares up 25% and 175% YTD, respectively. BetMGM (OTCPK:GMVHF) (MGM), Caesars Entertainment (CZR), and Bet365 are still scrapping to nab market share, while players like FuboTV (FUBO), MaximBet, and the online sports betting arm of Churchill Downs (CHDN) have ceased operations or cut down dramatically on their reach. PointsBet (OTCQX:PBTHF) has also agreed to sell its U.S. business to Fanatics (FANA), with betting operators focused on profitability at all costs. Compare some of the stocks here.

The biggest wildcard to watch could be Disney's (DIS) ESPN Bet entering the sports betting scene through a deal with Penn Entertainment (PENN). ESPN Bet is not expected to launch until the middle of the season, but will get an immediate push from ESPN's broad football coverage across different platforms. "Since ESPN has to promote the ESPN Bet concept via odds attributions, digital product integrations and such, the deal is basically a marketing agreement for the sports brand," notes SA Investing Group Leader Stone Fox Capital.

Other picks: If the launch of ESPN Bet leads to a jump in promotional activity in the sector, Gambling.com (GAMB) has been called out as a stock that could benefit. Looking at the broader sector, Genius Sports (GENI) has been mentioned as a supplier of mission-critical data, as well as sports betting provider Flutter Entertainment (OTCPK:PDYPY). The Roundhill Sports Betting and iGaming ETF (BETZ) is also up nearly 20% on a year-to-date basis, with DraftKings (DKNG) and Penn Entertainment (PENN) listed as the two top holdings in the fund. (8 comments)

AI disclaimers

Google (GOOG, GOOGL) has introduced a new policy that will mandate political advertisers to "prominently" disclose when their ads contain AI-generated material, in an effort to increase transparency and curb the spread of inauthentic content. The mandate will go into effect in mid-November, a year ahead of the U.S. presidential and congressional elections. The move comes a week before top tech executives are scheduled to meet Senate Majority Leader Chuck Schumer in Washington to discuss AI regulation, including Alphabet CEO Sundar Pichai and Meta (META) CEO Mark Zuckerberg. On the other side of the pond, Europe has already called on online platforms to label AI-generated content, which is also a step backed by the majority of WSB subscribers. (1 comment)

WeNegotiate

Shares of WeWork (WE) jumped as much as 18% on Wednesday - before erasing all the gains and then some - after the company said it was renegotiating almost all of its leases to fix its "inflexible and high-cost lease portfolio." Even after taking actions to improve its real estate footprint, WeWork's current lease liabilities - which make up more than two-thirds of its Q2 operating costs - "still remain too high," said CEO David Tolley. After sounding the alarm on going concern risks, the cash-strapped coworking space provider began talks with three asset managers about its restructuring plans, including exploring a Chapter 11 bankruptcy filing. WeWork wants to avoid bankruptcy, but it'll depend on whether the company can end or renegotiate most of its leases and reduce its rental costs. (3 comments)

That's a riot

Riot Platforms (RIOT), which has been losing money due to less-profitable mining and soaring energy prices, is now relying on credits earned by curtailing its power consumption during peak demand in Texas. With a scorching heatwave enveloping the state, the second largest bitcoin (BTC-USD) miner earned $31.7M in credits from power grid operator ERCOT in August alone, surpassing the total credits received in 2022. The credits, which significantly lowered Riot's cost to mine, equated to ~1,136 BTC - much higher than its bitcoin production in August. Riot CEO Jason Les believes its power strategy is a "key competitive advantage" at a time when bitcoin mining has become increasingly less profitable.

Today's Markets

In Asia, Japan -0.7%. Hong Kong -1.3%. China -1.1%. India +0.6%.
In Europe, at midday, London +0.3%. Paris +0.3%. Frankfurt +0.1%.
Futures at 7:00, Dow flat. S&P -0.4%. Nasdaq -0.7%. Crude -0.6% to $86.98. Gold flat at $1,944.40. Bitcoin +0.1% to $25,734.
Ten-year Treasury Yield -2 bps to 4.27%.

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Productivity and Costs
10:00 Quarterly Services Report
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
3:30 PM Fed's Williams Speech
3:45 PM Fed's Bostic: Economic Outlook
4:30 PM Fed Balance Sheet
7:00 PM Fed's Bostic: “Economic Mobility”

Companies reporting earnings today »

What else is happening...

Meet the Big Tech 'gatekeepers' list of the European Commission.

AMC (AMC) sees largest drop since 2021 on proposed stock offering.

GameStop (GME) gains after posting narrower-than-expected Q2 loss.

Biden administration to cancel drilling leases in Alaska wildlife refuge.

Roku (ROKU) pops on job cut plans, Q3 revenue guidance boost.

Apple (AAPL) slips as China orders gov't agencies to stop using iPhones.

Pentagon said to plan massive AI fleet to counter China, other foes.

Comcast (CMCSA) says Hulu sale process will start September 30.

Shares of C3.ai (AI) tumble as path to profitability expected to be longer.

VMware/Broadcom deal spread narrows amid reports on China review.