Genius Sports Shares Plunge 28% After $1.2 Billion Legend Acquisition Announcement
Genius Sports is facing a difficult time after announcing its $1.2 billion acquisition of Legend, a sports media and gaming affiliate company. The news was met with a sharp decline in the company’s shares price, falling nearly 28%, which suggests that investors remain unconvinced by the company’s media strategy.
An anonymous analyst told E+M that “investors have been spooked by the move into marketing,” adding, “they don’t like performance marketing and they don’t like affiliate marketing either.” Truist described the market reaction as “sell first and ask questions later,” highlighting the swift and significant drop in the stock.
Details of the deal reveal that Genius will pay $800 million in cash and $100 million in shares initially, with an additional $300 million contingent on performance over two years. To finance the acquisition, Genius plans to secure an $850 million term loan. The transaction values Legend at roughly 8.5 times its projected 2026 EBITDA after the earnout, and the deal is expected to close in the second quarter of this year.
Genius also provided a brief trading outlook, projecting that after the integration, the company will generate group revenue of $1.1 billion in 2026, with EBITDA margins around 30%. The company expects leverage to rise to 3x but also anticipates a rapid deleveraging, reaching half that level by 2028.
During an analyst call, CEO Mark Locke stated that the business was now on a “remarkable footing” and that the deal “supercharges” its media operations. However, he did not mention the word ‘affiliate’ during the discussion. Instead, Locke focused on “moments of intent,” “repeat usage,” “closed-loop measurement,” and “lifetime spend,” emphasizing the strategic importance of the acquisition.
Locke also highlighted that Genius maintains a “high bar” for mergers and acquisitions, having reviewed nearly 100 opportunities before choosing Legend. He reassured investors that “we have not, and we will not, enter into acquisitions unless we have total confidence [in] that business’ ability to deliver at the level that Genius expects.” Notably, the call took place before the market opened in New York, meaning the immediate market reaction had not yet been reflected in the share price. Locke addressed recent volatility, suggesting that fears over prediction markets’ growth had “very little to do with our underlying business strength.”
An industry source, speaking anonymously, expressed skepticism about Genius’s messaging strategy. They suggested that “they have tried to spin this as something other than an affiliate business,” but ultimately, “it is an affiliate business.” Truist pointed out a valuation gap, noting that Legend’s deal valuation at around 8.6x EBITDA is significantly higher than the roughly 3.5x to 5x valuations of other listed affiliates. This disparity, the firm argued, helps explain the recent stock weakness, with market concerns centered on potential AI disruption risks within the affiliate space.
Read also: Genius Sports Announces Major $1.2 Billion Deal to Acquire Legend
Meanwhile, competitor Sportradar made a similar move last year by acquiring XL Media’s US assets for $30 million in late 2024, signaling a broader industry trend into affiliate marketing.
Reactions from analysts were mixed. Stifel mentioned it was “still processing” the deal, with initial impressions “skewing net negative,” but also believed investors might be “underestimating clear product synergies” from the acquisition. On the other hand, expanding into performance marketing was seen as introducing “unique operating risks and cash flow volatility.” Texas Capital echoed concerns, stating that investors appeared “more comfortable” with the previous business model, adding that the acquisition added “a layer of near-term complexity.”
Finally, Citizens offered a more positive perspective, asserting that Legend was “not an apples-to-apples” pure-play affiliate business, implying that its strategic value might be different from traditional models. Genius Sports Shares
