📉 Resilient Trader Trade Idea: The House Always Wins, But Not Always This House (RSI)

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Resilient Trader is where smart traders come for vetted ideas.

Every week, we cut through the noise and surface opportunities that institutions are already eyeing - but with strategies tailored for retail traders. Today’s setup? A small-cap online gaming stock that has rallied on respectable headlines, but the underlying fundamentals are flashing warning signs. While researching for last week's recommendation MGM, I came across $RSI ( ▼ 1.21% ) and did some digging.

We’ll cover:

• Why Rush Street Interactive is a Short at current levels

• How to take advantage with a defined-risk put option

🔍 Trade Thesis: RSI is a Small Fish in a Shark-Infested Tank

Rush Street Interactive (RSI) has seen a recent pop in its stock price, but we think this is a classic case of the market getting ahead of itself. The company is facing a trifecta of headwinds: decelerating growth, eroding margins, and intense competition from behemoths like DraftKings and FanDuel.

Behind the scenes:

📉 Slowing Growth: Guidance for 2026 implies a deceleration in North American growth, from 27.8% in Q4 2025 to a 21-26% range.

💸 Margin Pressure: Despite a revenue beat in Q4, the company missed adjusted EPS estimates by a whopping 24.8%, signaling rising costs are eating into profits.

🦈 Intense Competition: RSI is a minnow in a sea of sharks, with a market cap and revenue base that are a fraction of its larger competitors.

📊 The Fundamentals Are Breaking Down

Let’s break it down:

💰 Revenue: $1.13B in 2025, a respectable 23% YoY growth, but a fraction of competitors like DraftKings ($6B).

📉 Slowing Growth: Guidance for 2026 of 21-26% growth is a red flag in a market where scale is everything.

💸 Profitability Concerns: The significant EPS miss in Q4 highlights the struggle to convert revenue into actual profit in a hyper-competitive and promotional environment.

🗃️ Colombian Headwinds: While the market cheered the removal of an incremental gaming tax, a new 19% levy on gross gaming revenue still presents a significant headwind in a key Latin American market.

📐 Valuation Is Stretched

RSI is priced for perfection in an imperfect world:

⚖️ EV/EBITDA: Trading at a multiple of 11.9x-15.7x, which is rich for a company with decelerating growth.

📉 DCF Analysis: While some models show upside, more conservative estimates that factor in the slowing growth and margin pressure point to a fair value in the $12-$15 range.

🆚 Competitor Comparison: RSI’s valuation is not justified when compared to its larger, faster-growing competitors. It lacks the scale and market position of DraftKings or FanDuel, yet its stock has been trading at a premium.

🧭 Technicals Agree: This Chart Looks Tired

❌ Resistance at $19.73: The stock has failed to break through this key technical level, which is a bearish signal.

❌ Below Key Moving Averages: RSI is trading below its 50-day and 100-day moving averages, indicating a loss of momentum.

❌ Weak Trend: The ADX indicator is at a low level of 16.77, suggesting a lack of a strong trend and the potential for a reversal.

💰 Current price: $17.95

🎯 Targets: $15.00 (initial), $12.00 (intermediate)

💥 💥 Trade of the Week: Defined-Risk Put Option

We’re recommending a straightforward, defined-risk options trade to capitalize on the expected downside.

🟢 Trade Setup

• Short RSI at $17.95 (with a stop at $20)

🛡️ Options Play

• Buy the July 17th, 2026 $17.50 Put for $2.35

📈 Risk-Reward

• Max Risk: $2.35 per share (the premium paid for the put)

• Max Reward: Potentially significant as the stock moves towards our price targets.

• Breakeven: $15.15 ($17.50 strike price - $2.35 premium)

🛑 Risk Management Tip

For the stock short, place a stop-loss order at $20.00. This will limit your potential loss if the stock unexpectedly rallies. For the options trade, the risk is already defined to the premium paid.

🚀 Catalysts on the Horizon

Keep your eyes on:

1. Next Earnings Report: Another EPS miss or downward revision to guidance could be the trigger for the next leg down.

2. Competitor Earnings: Strong reports from DraftKings or FanDuel will further highlight RSI’s relative weakness.

3. Analyst Downgrades: As the reality of slowing growth and margin pressure sets in, we expect analysts to revise their ratings and price targets downwards.

4. Technical Breakdown: A decisive break below the recent lows could trigger a wave of selling.

🧠 Final Thoughts

RSI is a classic example of a stock that has been bid up on hype and hope, while the underlying fundamentals are deteriorating. The company is in a tough spot, and we believe the path of least resistance for the stock is lower.

✅ Short RSI at $17.95
💸 Buy the July 17th, 2026 $17.50 Put for $2.35

We'll be watching this one closely.

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