Rush Street Interactive’s Index Addition Puts Fresh Focus on the Stock

Rush Street Interactive (RSI) has been added to both the Russell 2000 Growth-Defensive Index and the Russell 2000 Defensive Index, an event that can prompt portfolio shifts among index-tracking funds.

Against that backdrop, Rush Street Interactive’s share price has moved sharply, with a 30 day share price return of 23.6% and year to date share price return of 62.2%, while the 1 year total shareholder return sits at 110.2%. This points to strong momentum that index inclusion may be helping to reinforce.

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Rush Street Interactive now trades slightly above the average analyst price target yet sits at a modest intrinsic discount. The real question is whether there is still a buying opportunity here or if the market is already pricing in future growth.

Most Popular Narrative: 3.8% Overvalued

Compared with the last close at $31.32, the most followed narrative for Rush Street Interactive pegs fair value at $30.18, leaving only a small valuation gap for investors to weigh.

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.

Want to see what is baked into that fair value for Rush Street Interactive? Revenue compounding, margin shifts and a future earnings multiple all sit at the core of this narrative, with each assumption working together to support the $30.18 figure.

Result: Fair Value of $30.18 (OVERVALUED)

However, that fair value narrative for Rush Street Interactive could be challenged if Latin American tax or regulatory changes bite harder than expected, or if higher marketing spend squeezes margins.

Another View: Rush Street Interactive Through a Cash Flow Lens

The analyst narrative frames Rush Street Interactive as about 3.8% overvalued relative to a $30.18 fair value, yet our DCF model suggests something different. On a cash flow basis, RSI at $31.32 sits around 5.4% below an estimated $33.12 future cash flow value, painting a more supportive picture.

This kind of gap between a DCF model that points to value and an analyst target that leans cautious leaves you with a key question: which set of assumptions do you trust more for RSI over the long run?

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 42 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 mixed signals around Rush Street Interactive’s value have you thinking, now is a good time to review the facts and pressure test the story. To see what investors are optimistic about, start with the company’s 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.