CDRO Stock Forecast & Price Target

Codere Online Luxembourg SA demonstrated a positive financial trajectory, highlighted by a 16% year-over-year increase in average revenue per monthly active user (ARPMAU) and a significant 54% year-over-year growth in net gaming revenue (NGR) for Q4. Notably, the company's iCasino segment is gaining market share in Spain, contributing to a healthy overall market growth despite regulatory challenges, with a robust NGR growth of 50% year-over-year through the third quarter of 2023. Furthermore, the recent positive inflection in segment Adjusted EBITDA in Q1, alongside favorable performance in Colombia and the 'Other' segment, underscores the company's effective growth strategies and operational resilience.

Codere Online Luxembourg's recent financial performance indicates a slight decline in EBITDA margins to 30%, primarily due to customer acquisition strategies that favor higher-cost iCasino players, resulting in a year-over-year increase of 34% in blended customer acquisition costs (CAC). The company’s negative EBITDA of €4.1 million, although better than expectations, highlights ongoing challenges related to under-penetration in key markets, reflected by a low net gaming revenue per capita. Additionally, a decline in first-time depositors, alongside foreign exchange impacts reducing cash balances by €2 million, raises concerns about the sustainability of growth amid increasing competition and shifting customer dynamics.