• Thu. Sep 23rd, 2021

DraftKings Inventory Pops Forward of Earnings


Aug 6, 2021

Posted on: August 5, 2021, 11:48h. 
Final up to date on: August 5, 2021, 11:57h.

Todd Shriber Learn Extra

DraftKings (NASDAQ:DKNG) is becoming a member of different gaming equities to the upside Thursday. That may very well be an indication market members expect the corporate to ship excellent news when it reviews second-quarter outcomes earlier than the open of US markets tomorrow.

DraftKings CEO Jason Robins, seen right here in a 2018 Bloomberg interview. Analysts are bullish forward of the corporate’s second-quarter earnings report. (Picture: Bloomberg)

In what would be the Boston-based sportsbook operator’s fifth earnings report since going public final 12 months, analysts expect a lack of 58 cents a share on income of $247.22 million. The forecast for a per-share loss isn’t shocking, as a result of DraftKings has but to be worthwhile, and that’s not anticipated to vary till no less than 2023. The income estimate is reflective of DraftKings boosting its full-year income outlook in Might, when it stated it expects gross sales of $1.05 billion to $1.15 billion, up from a previous estimate of $900 million to $1 billion.
With DraftKings inventory having shed a 3rd of its worth from its March highs, there may be some burden on the corporate to excite Wall Road and traders with the forthcoming earnings replace. Some analysts imagine it’s attainable as a consequence of faster-than-expected state-level rollout of sports activities betting in some states.

Whereas a portion of this progress is probably going coming from pull-forward and sooner than anticipated adoption (helped by very aggressive advertising and marketing spending), we do count on continued progress off these greater base ranges as buyer familiarity, merchandise, and in-play betting adoption all stay of their infancy,” stated Financial institution of America analyst Shaun Kelley in a current word.

DraftKings at the moment presents cell betting in 11 states. However analysts count on administration will focus on attainable upcoming launches in Arizona, Louisiana, and Maryland, in addition to time strains for Connecticut and New York. Legislative updates for Florida and Massachusetts may be talked about on the Friday convention name.
DraftKings Inventory Nonetheless Expensive
Financial institution of America’s Kelley says DraftKings trades at 17x 2022 gross sales, and whereas that’s wealthy relative to different high-growth shopper cyclical names, the premium is warranted.
“We imagine this premium is justified, given the early stage enthusiasm for the vertical and the shortage worth related to DKNG, given it’s the solely US pure-play for sports activities betting of significant measurement,” stated the analyst.

Whereas DraftKings is the one pure-play sports activities betting title at the moment obtainable within the US fairness market — a trait lengthy highlighted by bullish analysts — it gained’t retain that standing perpetually, as a result of extra firms on this class are coming to market. Plus, competitors within the home sports activities betting area is hard.

Simply this week, Caesars Leisure (NASDAQ:CZR) stated it is going to spend $1 billion bolstering its iGaming and sports activities wagering publicity, whereas MGM Resorts Worldwide (NYSE:MGM) stated its betMGM unit is quickly gaining market share in each segments throughout the nation.
Soccer Focus
With the April by means of June interval and far of the present quarter not together with any soccer for US bettors to wager on, any DraftKings commentary on expectations for the upcoming season is more likely to be carefully monitored by analysts.
“Firms will possible middle expectations on a soccer season-timed restoration (pickup in volumes, media consideration, and a few new state exercise), although we nonetheless marvel about rising deal with topline market share and profitability driving efficiency,” stated Truist analyst Barry Jonas.
Even with the second quarter missing soccer, probably the most wagered-on sport on the US, state-level information point out DraftKings may high gross sales forecasts for the interval by 20 % to 30 %, in accordance with Oppenheimer analyst Jed Kelly.

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