Why Genius Sports Stock Just Crashed Today
Key Points
Genius Sports is a picks-and-shovels investment of sorts to the sports betting industry.
By adding Legened, the company hopes to better monetize the data from its sports betting capabilities.
The deal could make a lot of sense for the long term, but its sheer size seems to worry the market.
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Shares of leading sports betting data provider Genius Sports (NYSE: GENI) have plummeted 23% as of noon ET on Thursday. The company announced it was acquiring Legend, a digital sports and gaming media network, for up to $1.2 billion. Genius Sports will pay $800 million in cash (from a debt offering), $100 million in stock, and potentially $300 million more in earn-outs. With a market cap of just $1.5 billion, the sheer size of this deal seems to worry the market, especially given that the company is yet to reach profitability.
That said -- and setting the finances of the deal aside, for a second -- the combination of the two businesses makes a lot of sense. Legend is home to an array of media brands like Covers, Casino.org, and Sportsbook Review, and has premium content partnerships with Yahoo! Sports and Sports Illustrated. Legend had 118 million unique visitors in 2025 -- two-thirds of whom returned regularly -- making its network a premium asset for Genius as it looks to further monetize its sports betting data, technology, and partnerships.
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Management believes the combined company will see sales more than double from $669 million in 2025 to $1.6 billion in 2028. Similarly, they expect adjusted EBITDA to spike from $136 million in 2025 to $550 million. Should Genius deliver figures anywhere close to these expectations over the next few years, its stock could skyrocket. However, due to the shareholder dilution and increased debt load needed to fund the deal, Genius Sports' stock outcomes look quite binary. Either the deal will be a major boon for the company, or Genius Sports will be in a tough financial position.
However, with the National Football League holding a 10% stake in Genius Sports -- and the two businesses in an exclusive partnership that runs through 2029 -- America's favorite sports league likely won't let its partner fade into obscurity. Guiding to generate $160 million in free cash flow in 2026, Genius Sports could be a steal if it successfully integrates this deal.
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Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool recommends Genius Sports. The Motley Fool has a disclosure policy.
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