LIND RESEARCH
Research Deep-Dive | Premium Equity Research
The short thesis on BETCO rests on both short-term factors like weak SEO traffic not yet appreciated by markets and a current share price artificially boosted by aggressive buybacks, but also on long-term structural challenges like AI search, the rise of prediction markets, and more.
Despite our view, the analyst or the firm does not hold a negative position in BETCO, mainly due to limiting our liability risk by expressing our thoughts.
Disclaimer
This analysis represents the independent views of Lind Research and is based on publicly available information believed to be reliable, but no warranty is given as to its accuracy or completeness. Nothing herein is investment advice or a recommendation. We publish openly, and companies do not influence our conclusions. Lind Research may hold positions in securities discussed.
Analyst owns shares? No
Structural Headwinds and Near-Term Weakness
Company description: Better Collective (BETCO) is a sports-first affiliate and media house headquartered in Copenhagen, Denmark, and listed on Nasdaq Stockholm and Nasdaq Copenhagen with a market cap of about EUR 670m.
Lind has had a negative view of BETCO since our first research report on the company was released in 2024, following Google's attempt to curb parasitic SEO practices. We continue to believe that the prospects for BETCO are weakening and will outline the reasons for our continued pessimism.
Lind believes BETCO faces near-term earnings pressure from deteriorating traffic trends and longer-term structural headwinds from a shifting SEO landscape and the rise of prediction markets. Despite this, the stock trades at roughly a 130% premium to peers with stronger fundamentals. In our view, the main support for the share price has been value-destructive buybacks, a lever that is close to being exhausted. Our one-year price target is set at 81 SEK, and our three-year price target is 68 SEK. Which can be compared to today's price of 121 SEK. Our thesis rests on the following pillars:
Summary thesis:
Traffic decline not matching market expectations: Analysts and the market are overlooking deteriorating traffic trends across BETCO’s core brands. Our SEO tracker shows clear weakness, with most sites negatively impacted by Google’s December core update. If these trends persist, Q1 earnings are materially at risk.
NDC trends do not lie: NDCs continue to deteriorate, and our analysis suggests they remain the strongest leading indicator of future revenue. In contrast, the newly introduced VoD KPI points to declining traffic quality rather than improvement. Taken together, the data challenges the company’s messaging and raises questions about whether reported KPIs are masking underlying demand weakness.
Buybacks elevate share price: Buybacks have been a key support for the share price, at times representing over 20% of daily trading volume. Since December, buyback volumes have roughly halved, and the share has weakened in parallel. While other factors may provide marginal support, we believe the buyback program has been the dominant stabilizer. As the program is depleted soon, this source of demand will fade, leaving the share price exposed to fundamental pressures.
Rise of the prediction markets: The increasing adoption of prediction markets such as Kalshi and Polymarket poses a growing competitive risk to traditional sports betting. Our data suggests that accelerating prediction market volumes are beginning to coincide with slower sports betting volume growth, indicating early signs of substitution. While regulatory and demographic factors may temper near-term impact, we view this as a structural headwind for sports betting suppliers like BETCO over time.
AI search changes the game: Google AI Overview, not ChatGPT, is the primary threat. It targets informational queries, which our data suggest account for roughly 20% of traffic to one of BETCO’s core brands. As a result, the SEO landscape is structurally changing, and over time less traffic will be directed to sites like BETCO’s. This shift has only just begun.
Regulatory headwinds: We observe a global trend of rising regulatory pressure in online gambling. In several jurisdictions, overly restrictive frameworks have reduced channelization, shifting activity toward unregulated operators. This undermines consumer protection and puts licensed operators at a competitive disadvantage. A recent example is Brazil, where the regulatory transition has negatively impacted BETCO’s business. While improved enforcement could benefit compliant incumbents over time, the near-term effect remains a structural headwind for BETCO and the sector.
Market expectations and valuation are too high: Our growth outlook is intended to reflect the structural reality and challenges ahead for Better Collective AB, including a more demanding SEO landscape, intensifying competition, and rising regulatory friction. These factors underpin a lower and less visible growth trajectory than consensus assumes, with our 2027 EBIT estimate 30% below market expectations. Even so, the stock trades at around a 130% premium to peers. We believe this valuation gap has been materially inflated by aggressive buybacks rather than fundamentals. Our SEK 81 (1YR) and SEK 68 (3YR) price targets are therefore based on a more modest growth outlook and a 12-10x EBIT multiple, compared with roughly 14x today, which we view as more appropriate given the company’s risk profile and earnings visibility.
Lind Research