Craig-Hallum revising Q1 estimates for DraftKings, remains bullish long-term

Craig-Hallum says that for yet another quarter, DraftKings (DKNG) has been impacted by customer-friendly outcomes. While the start of March Madness was neutral for operators per the firm’s checks, the Sweet 16 and Elite 8 weekend resulted in favorites going 12-0. While college basketball is inherently a low-hold sport, these results were historically bad and as such, Craig-Hallum is lowering estimates for Q1 by $74M in revenue and $41M in EBITDA. That said, it thinks the long-term opportunity remains attractive, with a reasonable valuation at 12-turns EV/EBITDA. While short-term volatility of sports results and regulatory scrutiny continues to hit shares, the firm continues to insist investors play the long game. Craig-Hallum reiterates a Buy rating on the shares with a price target of $57.