Rush Street Interactive (RSI) has been added to the Russell 2000 Growth-Defensive and Russell 2000 Defensive indices, a move that can reshape how index-tracking funds and institutional investors approach the stock.

That index inclusion comes after a strong run in Rush Street Interactive’s stock, with a 30-day share price return of 23.26%, a 90-day share price return of 46.06%, and a very large 3-year total shareholder return. This is signalling momentum that investors are now reassessing against its current valuation.

If this kind of move has you looking beyond a single online gaming stock, it could be a good moment to scan the market for other fast growing opportunities using the 20 top founder-led companies

After a run that has pushed Rush Street Interactive near its analyst price target and into two Russell indices, the puzzle now is whether most of the upside is already priced in or if the latest move still leaves meaningful headroom.

Most Popular Narrative: 6.8% Overvalued

Based on the most followed narrative, Rush Street Interactive’s fair value of $30.18 sits below the last close at $32.22. This frames the recent index driven rally as slightly ahead of that model.

The analysts have a consensus price target of $30.18 for Rush Street Interactive based on their expectations of its future earnings growth, profit margins and other risk factors.

However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $33.0, and the most bearish reporting a price target of just $26.0.

What really sits behind that fair value is a specific mix of revenue expansion, margin uplift, and a future earnings multiple that is far from conservative. This raises the question of how those moving parts fit together and what kind of earnings power they imply for Rush Street Interactive over the coming years.

Result: Fair Value of $30.18 (OVERVALUED)

However, Rush Street Interactive’s story also leans on continued Latin America expansion and higher marketing spend, both of which could compress margins if conditions turn less favourable.

Another View: Our DCF Model Points To Undervaluation

The analyst consensus around Rush Street Interactive focuses on earnings multiples and implies the stock is 6.8% above its $30.18 fair value. Yet our DCF model, which prices the stock off future cash flows instead of headline P/E, points to a higher fair value of $36.66, around 12.1% above the current $32.22 share price. That split leaves you deciding which lens better fits how you think RSI will turn earnings into cash over time.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Rush Street Interactive for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 41 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the mix of bullish and cautious signals around Rush Street Interactive has you on the fence, it can pay to move quickly and test the numbers yourself. To dig further into why some investors are optimistic, review the 3 key rewards.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.