Is Genius Sports stock a buy?

A major investor just sold millions of shares of the stock.

Genius Sports (NYSE:GENI) stock was moving lower on Wednesday, perhaps due to a high-profile money manager selling millions of shares in the sports betting technology and data provider.

Specifically, Ark Invest, run by noted portfolio manager Cathie Wood, sold 2.8 million shares of Genius Sports stock in the Ark Next Generation Internet ETF (BATS:ARK). That sale, on August 19, accounted for about 5.7% of its total position in Genius Sports, according to Cathie’s Ark, a site that tracks Wood’s portfolio moves.

This comes four days after Wood sold 2.5 million shares in Genius Sports stock from the same ETF. The Ark Next Generation Internet ETF still owns about 3.5 million shares in Genius, worth about $44 million and accounting for about 1.8% of the entire portfolio. However, Wood pared more than half her stake in the stock, so it is significant.

Should investors be concerned?

Mixed quarter, but optimistic outlook

Genius Sports has carved out a strong niche in the growing world of sports betting, as one of the major providers of real-time data and analytics for sports leagues and teams, sports betting sites, and broadcast TV and streaming providers.

Its biggest partnerships are exclusive deals with the NFL, the English Premiere League, and, most recently, Lega Serie A. It also has deals with the NCAA, European Leagues, FIBA, DraftKings, FanDuel, bet365, EA Sports, CBS, NBC and ESPN, to name a few. It is among the leaders in its space, and a major rival of Sportradar (NASDAQ:SRAD).

Genius Sports had mixed results in its fiscal second quarter, missing earnings estimates with a sizable net loss but beating revenue projections on the strength of a 24% revenue increase.

However, it raised its outlook for revenue and adjusted earnings, mainly due to its expanded partnership with the NFL and expected growth in media and sports betting.

“Additionally, our extended and expanded partnership with the NFL reinforces our confidence in the long-term model, paving the way for continued margin expansion and cash flow growth for the foreseeable future. The strong momentum and new commercial successes across Betting, Media and Sports underpin our increased full-year 2025 guidance,” Mark Locke, Genius Sports co-founder and CEO, said.

Should you buy Genius Sports stock?

Cathie Wood did not offer any commentary on why she cut her stake in Genius Sports, but it very well could be a case of profit taking. The stock is up some 45% year-to-date and 66% over the past 12 months, so she may have taken the opportunity to cash some out.

The analysts that cover it almost unanimously call it a buy, with a median price target of $15 per share, which would suggest 20% upside. Several Wall Street analysts boosted their price targets after Q2 earnings were released.

One thing to watch is an antitrust lawsuit filed by a SportsCastr, also known as PANDA Interactive, a sports streaming and betting company, against both Genius Sports and Sportradar. It was first filed back in 2023 but was just amended earlier this year. What, if anything, comes of this is impossible to know right now, but it bears watching.

That aside, Genius Sports is in a great position to grow with its exclusive partnerships, and the growth of sports betting in general. It and Sportradar have established a competitive moat that should sustain it for the long term.

Genius Sports looks primed for major growth and is certainly a stock to consider. But investors should keep an eye on the valuation – as it has a price-to-sales ratio over 5. They should also watch for cash flow growth and monitor its profitability, as the company should start moving toward profitability.