Codere Online

Thesis & Rating

Codere Online is a small-cap online casino and sports-betting operator focused on Spain and Latin America — Mexico above all — carved out of the Spanish land-based Codere group and Nasdaq-listed via SPAC. Q1 2026 marked a genuine profitability inflection: net gaming revenue rose 13% to a record €64.4m, adjusted EBITDA surged 233% to €6.0m (from €1.8m), and the company swung to a €7.0m net profit from a year-earlier loss — all on a pristine balance sheet (€56.2m cash, no financial debt). Spain (+16%) and Mexico (+13%) drove it, together 93%+ of revenue, with casino 63% of the mix and average monthly active players up 14% to 183,500. The company held FY26 guidance (€235–245m NGR, €15–20m adjusted EBITDA). The catch: the stock has already re-rated to near its 52-week high, and customer-acquisition cost jumped to €212 per first-time depositor from €167 — competitive intensity creeping in.

HOLD, PT $9.50 (+5%) — a good company at a full price. Codere Online is executing well: profitable, net cash, growing in attractive under-penetrated LatAm markets, with a clean inflection in margins. But three things keep us at HOLD rather than BUY: the stock trades near its 52-week high with the Street’s target ($9.00) essentially at the current price, leaving little near-term upside; the ~20× FY26E EV/EBITDA multiple is full for a still-thin (~7% of NGR) margin profile; and rising CAC signals Mexican competition is intensifying. The net-cash balance sheet and controlling-shareholder structure add a take-private optionality that could surprise to the upside, but we will not chase a fully-valued micro-cap at its highs. Upgrade on sustained margin expansion, Mexican regulatory clarity, or a control bid; this is a watch-and-own-on-weakness name. Kelly: small, as befits a thinly-traded micro-cap.

Model & Competitive Position

Codere Online is a focused two-market operator with a casino-led mix and a clean balance sheet — small, but profitable and growing.

Five Forces, Condensed

• ▮Rivalry — intensifying in Mexico. The rising CAC (€212 vs €167) is the tell — international and local operators are competing harder for Mexican depositors; Spain is more settled.
• ▮New entrants — moderate. Licensing and local payment/marketing know-how are barriers, but Mexico is an attractive, growing market drawing entrants.
• ▮Substitutes — informal/illegal gaming in LatAm. The grey market is the competitor as much as licensed peers, especially in Mexico.
• ▮Supplier power — platform-dependent. A smaller operator relies more on third-party tech/content than the scaled majors; AI/customer-service partnerships are being leveraged for efficiency.
• ▮Buyer/owner power — the controlling shareholder. The Codere group’s control creates both an overhang and a potential take-private path; minority liquidity is thin.

LatAm Penetration & Mexican Regulation

The story is LatAm online penetration plus a margin inflection — with Mexican regulation the swing variable.

The LatAm Opportunity & Margin Inflection

Latin America — Mexico in particular — is among the most attractive online-gaming growth markets globally: large populations, rising smartphone penetration, and still-low online penetration of total gaming. Codere Online has converted that tailwind into a profitability inflection: adjusted EBITDA up 233% year-over-year and a swing to net profit, as the cost base leveraged against growing revenue and management deployed AI in customer service for efficiency. FY25 was the proof year (record €224m NGR, €13.8m adjusted EBITDA, more than double the prior year); FY26 guidance (€235–245m / €15–20m) extends the trajectory. The question is durability: can margins keep expanding while CAC rises?

Mexican Regulatory Risk — The Watch-Item

Mexico is the engine and the risk in one. The market has periodically floated gaming-regulation and tax changes, and any adverse shift would hit Codere Online disproportionately given Mexico is ~half its revenue. This is the LatAm version of the single-market regulatory dependence we flagged for Lottomatica (Italy) and the UK names — concentrated upside, concentrated policy risk. Currency (peso/euro) is a second-order exposure on the same revenue.

Q1 2026 Profit Inflection

Q1 2026 (to 31 March), preliminary unaudited:

The honest read: a clean, high-quality small-cap print — growth, a margin inflection, net cash, no debt. The two yellow flags are the rising CAC (margins inflected partly on operating leverage that competition could erode) and the still-thin absolute EBITDA (€6m a quarter), which makes the ~20× multiple sensitive to any growth wobble.

Guidance & Our Numbers

Guidance and trajectory:

• ▮FY26E (guided): NGR €235–245m (~+5–9%), adjusted EBITDA €15–20m (midpoint €17.5m, ~+27% on FY25’s €13.8m). Continued Spain stability + Mexico growth.
• ▮Margin trajectory: the inflection is the thesis — EBITDA margin rising off a low base; durability depends on CAC discipline as Mexican competition intensifies.
• ▮Balance sheet: €56.2m net cash, no debt — funds growth and buyback capacity (no Q1 repurchases under the existing programme); also the dry powder a controlling shareholder could use in a take-private.
• ▮Watch items: Mexican regulatory/tax developments, CAC trajectory, margin expansion, peso/euro FX, any control-shareholder action (take-private vs sell-down).

Target, Multiple & Scenarios

At ~$9.05 the cap is ~$441m (~€400m); net of €56m cash, EV ~€345m — about 20× FY26E adjusted EBITDA (€17.5m midpoint), or ~1.4× EV/NGR. The EBITDA multiple is full because margins are still thin (~7% of NGR); the EV/NGR multiple is more reasonable for a 13%-growing, net-cash operator. The problem for new money is the entry point: the stock sits near its 52-week high with the Street’s target ($9.00) at the current price, so the easy re-rating has happened. Our $9.50 target is a hair above the Street to credit the margin inflection and net-cash optionality, but it is deliberately modest — this is a fully-valued small-cap, not a discount. The asymmetric upside, if it comes, is a control-shareholder take-private at a premium rather than a multiple re-rate.

Risk Register & Final Word

• ▮Valuation / entry point — near 52-wk high with Street target at current price; little margin of safety for new money.
• ▮Mexican regulatory & tax risk — ~half of revenue; an adverse change hits disproportionately (the LatAm single-market dependence).
• ▮Rising CAC — €212 vs €167; intensifying competition could erode the margin inflection that is the whole thesis.
• ▮Regional concentration — Spain + Mexico 93%+; limited diversification.
• ▮Controlling-shareholder overhang — the Codere group’s control caps minority influence and could pressure the register (or deliver a take-private).
• ▮Small-cap liquidity & FX — thin trading; peso/euro/USD translation adds noise.

HOLD, $9.50. Codere Online has done the hard part — it is profitable, net-cash, debt-free and growing in attractive LatAm markets, with a clean margin inflection. But it has also already been rewarded for it: the stock sits at its highs with no Street upside, on a full EBITDA multiple, just as CAC starts rising. That is a HOLD — a quality micro-cap to own on weakness or into a control event, not to chase at the top of its range. Upgrade on durable margin expansion, Mexican regulatory clarity, or a take-private bid; downgrade on CAC-driven margin erosion or an adverse Mexican policy move. Kelly: small, reflecting both the micro-cap liquidity and the full valuation.

SOURCES & FLAGS. Q1’26 (NGR €64.4m +13% record; total revenue €60.3m; adjusted EBITDA €6.0m +233% from €1.8m; net income €7.0m vs €0.7m loss; Spain NGR €25.5m +16.4%, segment EBITDA €7.0m +27%; Mexico NGR €34.6m +13.4%; casino 63% / sports 37%; active monthly players 183,500 +14%; ~244k new customers, 90k FTDs, 37% conversion; CAC €212/FTD vs €167; cash €56.2m, no financial debt; FY26 guidance NGR €235–245m / adj EBITDA €15–20m unchanged) from Codere Online Q1’26 release & slides (GlobeNewswire / Investing.com / StockTitan / Globe and Mail / Yahoo, 7–8 May 2026, preliminary unaudited). FY25 record NGR €224m / adj EBITDA €13.8m. Price ~$9.05–9.28, near 52-wk high $9.72; cap ~$441m; Stifel Hold PT $9.00 (raised from $8.50). CEO Aviv Sher, CFO Marcus Arildsson. Controlled by the Codere group (overhang + take-private optionality). EV/EBITDA ~20× FY26E, EV/NGR ~1.4× — OUR ESTIMATES. Reports EUR; trades USD. Verify vs SEC filings.

DISCLAIMER. Informational commentary only; not investment advice, an offer, or a solicitation.