Fantasy and sports betting platform DraftKings extended its hot streak with a surprise earnings beat late Thursday. DraftKings stock rallied Friday after Q2 results.
Boston, Mass.-based DraftKings reported adjusted earnings of 14 cents per share compared to an adjusted loss of 29 cents last year. Revenue leapt 88% to $875 million. The numbers squarely countered FactSet analyst expectations for an adjusted loss of 12 cents per share on $764.5 million in revenue.
"We are acquiring new customers efficiently while simultaneously retaining and monetizing our existing players through rapid product innovation, less promotions, and higher hold from better bet mix," CFO Jason Park said in the results. "Our unit economics are outstanding with older states generating more than enough cash to fund investment in new states."
Monthly Unique Players (MUPs) increased 44% to 2.1 million customers, driven by strong payer retention and acquisition across its Sportsbook and iGaming products.
DraftKings expects to achieve positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in Q4 2023 and for the company's 2024 fiscal year.
DraftKings forecasts adjusted EBITDA between $150 million and $175 million for Q4 on $1.2 billion of revenue. Wall Street sees Q4 EBITDA of $162 million on $1.12 billion in sales.
The gambling company raised its sales outlook again for the current 2023 fiscal year, after lifting guidance in its Q1 earnings beat in early May. DraftKings raised the midpoint of its revenue guidance to $3.5 billion from the previous outlook $3.185 billion. Revenue growth is expected to range from 54% to 58% for the year. FactSet analysts predict full-year revenue of $3.3 billion.
DraftKings operates in 23 states where sports betting is legal as well as Ontario, Canada, and Puerto Rico. Currently, 34 states and Washington, D.C., allow some form of legal sports betting, according to the American Gaming Association. Four more states including Maine, Vermont, Kentucky and Florida legalized sports betting as of late June but have yet to officially launch.
DraftKings Stock
DraftKings stock rallied 5.8% to 31.74 Friday following earnings. Shares leapt nearly 12% premarket Friday.
DKNG stock soared 178% so far this year and was the IBD Stock Of The Day on July 24. DraftKings is a member of the IBD 50 list of top growth stocks as well as Leaderboard.
DraftKings stock rallied nearly 20% in July. A follow-on entry — a point at which to add to existing positions, but not make a first-time entry to the stock — emerged at 31.71. Thursday's premarket action implies a breakaway gap breakout above that entry.
DraftKings stock has 78 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. However, the company's consistent quarterly losses earn it a meager 48 EPS Rating. DraftKings' relative strength line is near its highest levels since late 2021 and it has a near-perfect 97 RS Rating.
