Caesars Entertainment Inc (NASDAQ: CZR) announced weak earnings results after the market closed Tuesday, but the stock is rallying Wednesday after the company announced plans to cut ad spending on the sports betting market.
What Happened: Caesars reported fourth-quarter revenue of $2.59 billion, which was in line with estimates. The company reported an earnings loss of $2.03 per share, which came in below estimates.
Caesars said its sportsbook is live in 22 states, but the company plans to reduce ad spending by largely focusing on new states moving forward.
See Also: Cryptocurrency, Sports Betting Apps Surge Following Super Bowl Ads: Coinbase (NASDAQ:COIN), DraftKings Lead The Way
Cramer's Take: "You have to stop the advertising, which Caesars has done," Jim Cramer said Wednesday on CNBC's "Squawk On The Street."
He suggested that fierce competition may have led Caesars to raise the white flag, and that may not be a bad thing.
People were taking advantage of some of the promotions the company was running and taking Caesars "to the cleaners," Cramer said.
With Caesars pulling back, Cramer is looking at another company continuing its push to acquire customers.
"I'd rather own DraftKings Inc (NASDAQ: DKNG)," Cramer said. "Why? Because it's really come down and they're the last man standing."
CZR, DKNG Price Action: At publication time, Caesars was up 2.41% at $78.42 and DraftKings was up 9.75% at $20.40.
Photo: courtesy of DraftKings.
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