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The company reported revenue of $1.33 billion for the quarter, missing the $1.39 billion analysts expected. It also reported a larger loss than anticipated, losing 53 cents per share compared to the 41 cents Wall Street projected. Management noted that sports results favored bettors more than usual, which reduces the house's take, and that they spent more on promotions to bring in new users.
This is a setback for the goal of steady profitability. While the number of active players continues to grow, the business remains sensitive to the luck of the draw in sports and the high cost of keeping customers from switching to rival apps. For long-term owners, the focus stays on whether DraftKings can eventually pull back on these expensive promotions without losing its lead in the market.
See the full quarter, and how our tracked metrics did
Source: Company earnings report
The company now expects to bring in between $6.35 billion and $6.55 billion this year, down from its earlier target of up to $6.9 billion. This change reflects a decision to plow more money into its new prediction markets, which allow users to bet on non-sports events like elections or awards shows.
While this new category could open up a different group of customers, it comes at the cost of near-term revenue. This shift suggests that the core sports betting market is becoming more expensive to compete in, forcing the company to look for growth in new, unproven areas to maintain its momentum.
Source: WSJ
DraftKings is set to report its latest numbers today, with analysts expecting revenue of about 1.39 billion dollars. The main things to watch are whether the company stayed profitable and if it is keeping its share of the betting market as more rivals enter. We are also looking for updates on how many people are using the app regularly, as keeping those active players is what allows the business to spend less on marketing over time.
CEO Jason Robins highlighted prediction markets, where people bet on the outcomes of real-world events like elections or awards, as a major new opportunity for the platform. He also noted that the company is using artificial intelligence to sharpen its operations and manage changing state rules. While traditional sports betting remains the core business, these new categories could help DraftKings find growth outside of the NFL season. For long-term owners, the focus remains on whether these new features can keep users on the app without requiring the massive marketing spend that defined the company's early years.
Source: CNBC Television
Stifel Nicolaus lowered its price target from $36 to $32. Even with the lower target, the firm's outlook remains well above the current stock price of roughly $20. This move follows a similar target cut from MoffettNathanson earlier in the month, bringing the average analyst target across the market to $32. While the lower targets suggest analysts are tempering their near-term expectations, the overall view still assumes the business will become more valuable as it moves toward consistent profitability.
Source: Stifel Nicolaus
Management has missed expectations in four of the last five quarters, suggesting they are struggling to forecast costs as they pivot into new betting markets.
| Expectation | |
|---|---|
| EPS | $0.43 |
| Revenue | $2.19B |