[BUY HEAVY!] THIS ONE Stock Runs the Sports Economy transcript

Investors are fighting over which sports book wins, how big prediction markets get, and whether sports advertising keeps booming. I'm going to show you how those businesses feed into one another, and why one $6 stock I've been watching could be worth closer to $20 each. Hey, bow tie nation. Joseph Hog following up on one of the biggest opportunities I've been watching. I showed you a few weeks ago why advertising could be the next growth engine for Genius Sports, ticker G NI.

But even that could be underestimating the stock. I'm going to show you how this company is positioning itself to be the critical infrastructure layer to the entire 100 billion plus sports economy. Genius Sports is essentially the technology and the data layer connecting the sports economy. It has long-term partnerships with more than a thousand sports organizations, including the NFL, Premier League, and the NCAA, giving it the rights to collect and distribute official league data.

Genius takes everything happening on the field, turns it into real-time data and digital products, then distributes that through sports books, broadcasters, advertisers, and other platforms. It also provides streaming analytics, AI, and fan engagement technology, essentially helping leagues and teams turn what happens in the game into something that can be distributed, experienced, and monetized. To really understand the opportunity though, you have to stop thinking of Genius Sports as just a data provider.

The data itself is only the starting point. Genius then combines the official sports data with its AI and technology layer, Genius IQ, to turn it all into something more valuable. Insights, products, and experiences that its customers can actually use. That ability to do more with the data is what connects Genius across the sports economy from leagues and teams to sports books, broadcasters, advertisers, prediction markets, and ultimately to the fans themselves.

And that is where the business gets interesting and how genius becomes a critical infrastructure layer to five pillars of the sports economy. Sports books needs the data to create those betting markets. Leagues and teams use the technology to analyze and monetize their games. Broadcasters turn that data into better viewing experiences while advertisers use it to reach fan. I'm going to explain each of these layers, how Genius acts as a picks and shovels provider to each and how that combined cash flow adds up to a very mispriced stock.

Each of these relationships reinforces the others. More leagues create more data. More data attracts more sports books, advertisers, and platforms. More engagement creates more valuable audiences. It's a flywheel. With Genius sitting right in the middle, collecting that toll as a sports economy grows. We start with the sports books here where Genius is already deeply embedded in the industry. Sports books need that accurate official real-time data to set live betting markets, settle wages, and manage that risk.

Genius provides that data along with streaming, trading technology, and managed services. According to Grand View Research, global sports betting reached $111 billion last year, projected to grow almost 10% annually to 236 billion by 2033. But there is an asterisk on this, something we're going to see in every layer that Genius Connects. The company doesn't need to pick which sports books ultimately wins. As betting activity grows across the industry, Genius provides the critical infrastructure that those operators need to to compete and the cash flows to make it possible.

Now, the leagues are the other side of that infrastructure. The NFL, the Premier League, and the NCAA produce incredibly valuable games and engaged audiences, but need a partner to turn what happens on the field into data that can be distributed and monetized. So, Genius helps capture that official data and transform it into products for sports books, broadcasters, advertisers, and fans. So Genius isn't just selling that league data downstream.

It helps leagues turn their games into digital products, creating more ways to engage with fans and generate the revenue before and after the whistle blows. And that same data and technology becomes just as valuable at the team level. On the field, Genius provides video and data capture, performance analytics, and AI powered tools that helps teams understand the game and improve their performance. off the field. Then the technology helps teams better understand their fans, personalize their digital experiences, create deeper relationships with them.

So Genius becomes valuable on both sides of that business, helping teams compete on the field while also giving them the ways to engage and ultimately monetize their fans off of it. PWC estimates team and franchise valuations are set to accelerate, growing almost 8% a year from 7% last year. The global sports analytics market is growing even faster from an estimate of $5.8 8 billion last year to 31 billion by 2034, an annualized 20% pace.

And Genius is right there in the middle of it. So that data, the fan engagement, it all feeds directly into what I highlighted in our last video, the advertising side of the business, I think could become Genius Sports next major growth engine. That's because Genius combines live game data with its fan graph and moments engine to help advertisers identify not just which fans to reach, but also the right moment to reach them. that helped bring in 174 new advertisers in the second quarter alone, including McDonald's, Airbnb, and YouTube TV.

Now, with the Legend acquisition adding more than 320 million annual visits from 118 million unique visits to the distribution, Genius has both the technology and the audience to monetize that engagement, layering a high growth advertising business on top of the infrastructure already built. The global sports sponsorship market is slower growth here, but enormous in size. Already at $91 billion last year and forecast to $181 billion by 2034 for a 7.7% annualized pace.

And the newest opportunity before I show you how this all fits together in valuation is prediction markets where genius can serve that as a trusted arbiter to what actually happened. These platforms need that official real-time data and the integrity services that every participant can trust to settle all those contracts accurately. And there is no longer just a potential market. Genius has already partnered with Koshi and Poly Market, supplying the same official sports data infrastructure used by their sports books.

Trading volume on just Khi and Poly Market alone have exploded from $5 billion last September to 24 billion in April of this year. That is a five times increase in just 7 months. The industry is just getting started with Genius as a key partner. But right here is where all these pieces come together and why I think Wall Street may still be missing the bigger story. More league partnerships create more official data. More data makes Genius more valuable to those sports books, the broadcasters, and the prediction markets.

That creates more fan engagement, making the platform even more valuable to its advertisers and leagues. This is a flywheel with each part strengthening the others. And that's what sets up the real disconnect in this stock. If genius is becoming a critical infrastructure across the sports economy, why isn't the market valuing it that way? When it does, what is the fair value of the stock? A big part of that disconnect and really the opportunity here is what we talked about in the first video that the market is still viewing Genius through a narrow lens.

Investors have historically associated the company with sports betting. Even as Genius has expanded into broader sports, technology, media, and an advertising platform. But then these underlying numbers are moving quickly. Revenue grew at a 25% annual pace over the last three years. Operating cash flow jumped from under 15 million in 2023 to $86 million last year. And Wall Street expects revenue to surpass a billion dollars this year.

That is a 51% growth in sales. Management guided to 100 million cash flow for the second half of the year and and 60% free cash flow conversion in 2028. Now on all of this, the question becomes less about whether this ecosystem has value and more about whether Genius can convert its position into that sustained earnings and cash flow. Because if it can, the valuation I'm going to work up for you next starts looking a lot different.

Now, in our last video, I kept the valuation near-term. And based on this year's forecast of 1.02 billion in revenue on that 5-year average valuation, investors paying about 3.2 times on a price to sales basis gives us a $3.2 $.2 billion market cap for the company and roughly $12 per share. But then I think here the flywheel that we've laid out really starts showing its value further out than that. And that's where the valuation takes off.

Analysts expect 2027 sales to grow another 28% to 1.3 billion. And I think stronger monetization across these markets could push that closer to 1.4 billion. If Genius proves it can deliver on that growth, investors start paying more attention to it on that valuation and it could rerate as well. The stock traded closer to about four times sales in 2024 and as high as five times in 2021. Now, I'm going to stay conservative here and use that four times valuation on 1.4 billion in sales.

That alone gives us a $5.6 billion market cap versus about $1.5 billion today, roughly 270% upside or about $20 per share from the current under $6 each. Now, being critical infrastructure doesn't make Genius untouchable. Uh, one important factor to watch is the company's ability to continue renewing and expanding those exclusive league and data rights that are going to feed into this entire ecosystem. Those contracts can be expensive to renew and rising costs could affect the pace of margin expansions even as we see that revenue grow.

Now, these are generally long-term partnerships. So, I'm not too worried about that happening, but it does happen. Also, competition from sports radar and other new technologies makes continued innovation important to maintaining Genius's position. most importantly or just that flywheel has to translate into cash flow if all these new products and relationships require continually higher investment without those stronger margins.

The infrastructure thesis doesn't quite create nearly as much shareholder value. But then, as we saw with those numbers, Genius doesn't need every part of the sports economy to win. Just more activity flowing through that infrastructure already powers. If that flywheel drives sales even close to that $ 1.4 4 billion forecasted revenue next year and and investors rerate the shares closer to that four time sales, you get a share price well above where it is right now.

Closer to 15 or $20 a share than $6 each. Check out shares of Genius Sports, sticker G NI. Don't forget to join the Let's Talk Money community by tapping that subscribe button and clicking the bell notification.