Can Rush Street Interactive Sustain Its Gains After Surging 58% This Year?

If you are staring at Rush Street Interactive and wondering whether now is the right time to buy, sell, or hold, you are definitely not alone. Over the past year, this stock has been on a wild ride, notching an eye-popping 102.6% gain and soaring more than 490% in the last three years. The past month has been a bit choppy with a -2.6% return, and the last week dipped -1.4%. However, these short-term moves come against a backdrop of much bigger gains. Year-to-date, Rush Street Interactive is up a robust 58.1%.

What is driving all this action? It is a mix of optimism around online gaming growth and shifting attitudes toward risk in this rapidly evolving sector. Regulatory headlines and new state rollouts occasionally push the needle, but most of the big price moves seem to be tied to the broader story: investors betting on the company’s ability to capitalize on the expanding digital gambling market and outpace legacy competitors.

But, before making any big decisions, it is important to take a hard look at the numbers. When it comes to traditional valuation checks, Rush Street Interactive scores just 1 out of 6 for being undervalued. That suggests the current price does not present a significant bargain by conventional metrics. So how can we make sense of the premium investors are willing to pay? Let’s dig into the standard valuation methods first, and then unlock a more insightful way to value the company at the end of our deep dive.

Rush Street Interactive scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Rush Street Interactive Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by forecasting future cash flows and then discounting them back to today’s value. In Rush Street Interactive's case, the two-stage Free Cash Flow to Equity method was used, focusing on expected cash that could ultimately flow to shareholders.

Currently, Rush Street Interactive generates $68.5 million in free cash flow. Analysts anticipate significant growth, with projections reaching $107.9 million by 2026 and $162.2 million in 2027. Longer-term, Simply Wall St extrapolates this momentum further, estimating free cash flow to hit $388.8 million by 2035. All projections are in US dollars, as reported by the company.

Using these projections, the DCF model places the fair value of Rush Street Interactive shares at $22.41. This valuation implies that the stock is trading at a 3.1% discount to its intrinsic worth. The price reflects its present fundamentals and near-term outlook quite closely.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Rush Street Interactive.

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Rush Street Interactive's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Rush Street Interactive Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used metric for valuing profitable companies because it provides a simple way to judge whether a stock is expensive or cheap relative to the profits the business generates. For investors, a higher PE ratio often reflects expectations for faster earnings growth or lower risk, while a lower PE can point to slower growth or more uncertainty in the outlook.

Rush Street Interactive currently trades at a PE ratio of 82.1x. This is substantially higher than the hospitality industry average of 24.5x and the company’s peer average of 37.6x. Such a premium usually signals that investors expect RSI to deliver strong future growth or enjoy a unique competitive advantage. However, paying a high PE also builds in higher expectations, which brings added risk if the company does not deliver.

Simply Wall St’s proprietary “Fair Ratio” provides a more tailored benchmark for valuation than the standard industry or peer multiple. The Fair Ratio is calculated based on the company’s growth prospects, risk profile, profit margins, market cap, and industry context and is 26.4x for Rush Street Interactive. This approach gives a deeper understanding of a stock’s fair value because it puts all key drivers into perspective, not just broad sector trends or peer group averages.

Comparing the Fair Ratio of 26.4x to RSI’s current PE of 82.1x, the stock appears to be significantly overvalued using this metric.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Rush Street Interactive Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply the story behind the numbers—your perspective on how Rush Street Interactive will grow, what its margins might be, and what all that means for its intrinsic value.

Instead of just looking at one fixed price target, Narratives connect a company’s story to financial forecasts and then translate those into a dynamic fair value. Narratives are easy to use and available right on the Simply Wall St Community page, where millions of investors share their perspective and assumptions, making it accessible to all kinds of investors.

They allow you to directly compare your Fair Value estimate, built on your own beliefs and research, to the current share price. This helps you decide if it is time to buy or sell. Because Narratives update automatically when new news or results are released, they always reflect the latest market conditions and risks.

For example, some investors are highly bullish and see Rush Street Interactive expanding quickly across the Americas, setting their fair value as high as $23.00. Others worry about regulatory or tax risks, believing a value closer to $16.00 is justified based on their more cautious outlook. With Narratives, your investment decisions become as unique and adaptable as your view of the company’s story.

Do you think there's more to the story for Rush Street Interactive? Create your own Narrative to let the Community know!

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.

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