DraftKings (DKNG) AI Stock Analysis

• Market Cap: $24.27B
• Dividend Yield: N/A
• Average Volume (3M): 11.30M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.49
• Revenue Growth: 18.51%
• EPS Growth: 37.25%
• Country: US
• Employees: 5,100
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Gambling, Resorts & Casinos
• EPS (TTM): -0.52
• Shares Outstanding: 497,772,520
• 10 Day Avg. Volume: 16,163,081
• 30 Day Avg. Volume: 11,297,578
• PEG Ratio: 0.90
• Price to Book (P/B): 17.74
• Price to Sales (P/S): 3.76
• P/FCF Ratio: 43.99
• Enterprise Value/Market Cap: 0.55
• Enterprise Value/Revenue: 2.45
• Enterprise Value/Gross Profit: 5.15
• Enterprise Value/Ebitda: 298.08
• 1Y Price Target: $43.22
• Price Target Upside: 58.66% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 30
• EPS Forecast (FY): 0.63
• Revenue Forecast (FY): $7.31B

• Rating: 59 Neutral
• Price Target: $28.00 ▲(2.79% Upside)

DraftKings' overall stock score reflects strong revenue growth and strategic initiatives, which are offset by persistent financial losses and high leverage. The technical indicators suggest caution, while the valuation remains unattractive due to negative profitability. The earnings call provides a mixed outlook with positive long-term strategies but immediate challenges.

Positive Factors

Revenue Growth

Nearly 90% TTM revenue growth signals durable expansion of DraftKings' core addressable market and successful user monetization. Sustained top-line momentum supports scale benefits across marketing, product investment, and market entry economics over the next several quarters.

Cash Generation

Improving free cash flow and near-par conversion of net income to FCF enhance financial flexibility. Stronger cash generation can fund marketing, product development, and debt reduction without overreliance on external capital, supporting sustainable operating scale.

Partnerships & Retention

Exclusive media partnerships plus material retention gains deepen distribution and reduce marginal CAC. Better customer stickiness and premium marketing channels are structural advantages that raise lifetime value and strengthen competitive positioning across regulated U.S. markets.

Negative Factors

High Leverage

Significant leverage limits strategic optionality and heightens refinancing risk if cash generation weakens. A thin equity base and negative ROE mean earnings variability can quickly impair solvency metrics, constraining long-term investment and M&A flexibility.

Persistent Unprofitability

Ongoing negative margins reflect structural cost and promotional intensity; until operating margins sustainably turn positive, DraftKings must balance growth with profitability. Continued losses impede retained earnings accumulation and prolong reliance on cash/capital markets.

Operational Revenue Volatility

Revenue and guidance are exposed to unpredictable sports outcomes and hold variability, creating structural volatility in quarterly results. This makes forecasting revenue and cash flow less reliable, complicating capital allocation and margin progress over a multi-quarter horizon.

DraftKings Business Overview & Revenue Model

Company Description

DraftKings Inc. operates a digital sports entertainment and gaming company. It offers multi-channel sports betting and gaming technologies, powering sports and gaming entertainment for operators in 17 countries. The company operates iGaming through its DraftKings brand in 5 states, as well as operates Golden Nugget Online Gaming, an iGaming product and gaming brand in 3 states. Its Sportsbook is live with mobile and/or retail betting operations in the United States pursuant to regulations in 18 states. The company's daily fantasy sports product is available in 6 countries internationally with 15 distinct sports categories. In addition, it offers DraftKings Marketplace, a digital collectibles ecosystem designed for mainstream accessibility that offers curated NFT drops and supports secondary-market transactions, as well as owns Vegas Sports Information Network (VSiN), a multi-platform broadcast and content company. DraftKings Inc. was founded in 2011 and is headquartered in Boston, Massachusetts.

How the Company Makes Money

DraftKings generates revenue primarily through several key streams: entry fees from daily fantasy sports contests, sports betting operations, and online casino gaming. Users pay to enter fantasy contests, and DraftKings retains a portion of the entry fees as revenue. In the sports betting segment, the company takes a percentage of wagers placed by users, known as the 'vig' or 'juice.' Additionally, DraftKings has partnerships with various sports leagues and teams, which help drive user engagement and brand recognition, while also providing opportunities for advertising and promotional deals. The company's ability to expand into new markets and form strategic alliances with media companies further contributes to its growth and earnings potential.

DraftKings Financial Statement Overview

Summary

DraftKings exhibits strong revenue growth and improving cash flow metrics, which are positive indicators of its market position and operational potential. However, persistent losses and high leverage pose significant risks to financial stability. The company needs to focus on achieving profitability and reducing debt levels to enhance its financial health and sustain long-term growth.

Income Statement

DraftKings has shown significant revenue growth, with a TTM increase of 89.7% compared to the previous year, indicating strong market demand and expansion. However, the company remains unprofitable with a negative net profit margin of -4.9% and an EBIT margin of -0.05%, reflecting ongoing operational challenges and high costs. The gross profit margin of 39.2% suggests some efficiency in cost management, but the negative EBITDA margin of -1.24% highlights the need for improved operational efficiency.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 1.81, indicating significant leverage and potential financial risk. The return on equity is negative at -29.5%, reflecting the company's inability to generate profits from shareholders' equity. The equity ratio stands at 15.8%, suggesting a moderate level of equity financing relative to total assets. Overall, the balance sheet shows a need for improved financial stability and reduced leverage.

Cash Flow

DraftKings has demonstrated strong free cash flow growth of 17.1% in the TTM, indicating improved cash generation capabilities. The operating cash flow to net income ratio of 0.38 suggests that the company is generating cash from operations, albeit at a lower level compared to net income. The free cash flow to net income ratio is nearly 1, indicating efficient conversion of net income to free cash flow. Despite these positive trends, the company needs to maintain consistent cash flow improvements to support its growth and reduce reliance on external financing.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.46B	4.77B	3.67B	2.24B	1.30B	614.53M
Gross Profit	2.60B	1.82B	1.37B	756.19M	501.86M	267.94M
EBITDA	44.89M	-319.35M	-586.65M	-1.27B	-1.39B	-765.85M
Net Income	-267.57M	-507.29M	-802.14M	-1.38B	-1.52B	-1.23B
Balance Sheet
Total Assets	4.62B	4.28B	3.94B	4.04B	4.07B	3.44B
Cash, Cash Equivalents and Short-Term Investments	1.23B	788.29M	1.27B	1.31B	2.15B	1.82B
Total Debt	1.91B	1.34B	1.35B	1.32B	1.32B	81.61M
Total Liabilities	3.89B	3.27B	3.10B	2.72B	2.39B	807.98M
Stockholders Equity	732.29M	1.01B	840.31M	1.32B	1.68B	2.63B
Cash Flow
Free Cash Flow	619.02M	407.59M	-115.14M	-729.16M	-517.78M	-385.57M
Operating Cash Flow	667.57M	417.77M	-1.75M	-625.52M	-419.51M	-337.88M
Investing Cash Flow	-194.53M	-566.60M	-90.36M	-208.77M	-195.02M	-227.34M
Financing Cash Flow	78.63M	-144.47M	-63.22M	-16.73M	1.14B	2.31B

DraftKings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 27.24
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DKNG, the sentiment is Negative. The current price of 27.24 is below the 20-day moving average (MA) of 31.62, below the 50-day MA of 33.15, and below the 200-day MA of 37.34, indicating a bearish trend. The MACD of -1.80 indicates Positive momentum. The RSI at 27.99 is Positive, neither overbought nor oversold. The STOCH value of 15.25 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DKNG.

DraftKings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BYD	75 Outperform	$6.62B	3.63	87.17%	0.84%	5.91%	336.91%
SGHC	73 Outperform	$4.51B	20.78	32.35%	1.34%	29.54%	4389.69%
RSI	72 Outperform	$4.00B	69.62	29.67%	―	23.15%	―
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
DKNG	59 Neutral	$24.27B	-48.16	-29.59%	―	18.51%	37.25%
FLUT	55 Neutral	$26.97B	-117.34	-2.00%	―	―	―
PENN	47 Neutral	$1.73B	-2.05	-35.97%	―	8.24%	-77.54%