What Happened?

Shares of racing, gaming, and entertainment company Churchill Downs (NASDAQ:CHDN) fell 14.9% in the morning session after the company reported mixed first quarter 2025 results, which included an EPS beat, but revenue and EBITDA were in line. Revenue was up 9%, with both gaming and racing up around 10%. But TwinSpires, where customers place horse bets online, saw less action, which softened the overall results. Management maintained a steady tone, reaffirming confidence in its core businesses but pausing certain capital projects due to the economic backdrop. 

Zooming out, we think this was a decent quarter featuring some areas of strength but also some blemishes. The areas below expectations seem to be driving the move.

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What The Market Is Telling Us

Churchill Downs’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. Moves this big are rare for Churchill Downs and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 12 months ago when the stock gained 9% on the news that the company reported first-quarter results that blew past analysts' revenue, EBITDA, and EPS expectations. That was driven by strong performance in its racing segment, particularly at its TwinSpires subsidiary. During the earnings release, Churchill Downs announced it would open The Rose Gaming Resort in September 2024, which cost $460 million to build. It also shared plans to open another site in the first quarter of 2025. Lastly, the company closed the sale of its 49% stake in United Tote Company on April 8, 2024. Overall, this was a really good quarter that should please shareholders.

Churchill Downs is down 32.9% since the beginning of the year, and at $88.32 per share, it is trading 40.1% below its 52-week high of $147.45 from November 2024. Investors who bought $1,000 worth of Churchill Downs’s shares 5 years ago would now be looking at an investment worth $2,024.

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