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DraftKings (DKNG)
NASDAQ:DKNG
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DraftKings
(NASDAQ:DKNG)
Rating:58Neutral
Price Target:
$37.00
▲( 6.11% Upside)
Positive Factors
Financial Management
DraftKings executed well with strong user engagement, improved structural sportsbook hold, and disciplined promotional spend supporting solid performance.
Growth Strategy
Core trends remain intact with rising parlay mix, AI-driven efficiencies, and continued product innovation positioning DraftKings to scale profitably.
Market Position
DraftKings is a vertically integrated digital gaming leader with strong market share in U.S. sportsbook and iGaming, supported by a differentiated platform that enables real-time, personalized wagering experiences.
Negative Factors
Financial Performance
DraftKings revised its full-year 2025 revenue guidance down, reflecting a 2.3% decrease and a 10.5% decrease in AEBITDA guidance due to sporting outcomes.
Market Maturity
Decelerating handle growth has been a significant concern from investors who view it as evidence the broader online sports betting market may be maturing earlier than presumed, implying a smaller TAM.
Revenue Impact
The company experienced another quarter of customer friendly sport outcomes that negatively impacted revenue & EBITDA.
DraftKings (DKNG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$31.01B
Dividend YieldN/A
Average Volume (3M)10.77M
Price to Earnings (P/E)―
Beta (1Y)1.91
Revenue Growth22.86%
EPS Growth30.40%
CountryUS
Employees5,100
SectorConsumer Cyclical
Sector Strength76
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)-0.07
Shares Outstanding496,285,640
10 Day Avg. Volume13,042,400
30 Day Avg. Volume10,772,997
Financial Highlights & Ratios
PEG Ratio1.64
Price to Book (P/B)17.04
Price to Sales (P/S)0.00
P/FCF Ratio43.29
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$54.96Price Target Upside57.61% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering25
DraftKings Business Overview & Revenue Model
Company DescriptionDraftKings Inc. is a digital sports entertainment and gaming company that operates in the United States. It is primarily known for its daily fantasy sports contests, sports betting, and iGaming offerings. Founded in 2012, DraftKings provides an innovative platform for sports enthusiasts to engage in a variety of sports-related activities, including fantasy sports competitions, wagering on live sporting events, and accessing online casino games where legal. The company leverages technology to offer a seamless experience across its web and mobile applications.
How the Company Makes MoneyDraftKings makes money through several key revenue streams. Its primary source of revenue comes from offering daily fantasy sports contests, where users pay entry fees to participate in competitions with the potential to win cash prizes. Additionally, DraftKings generates significant revenue from sports betting, allowing users to place wagers on various sporting events, both pre-game and live. The company also earns money from its iGaming operations, which include online casino games such as blackjack, roulette, and slots. Furthermore, DraftKings benefits from strategic partnerships with major sports leagues, teams, and media organizations, which enhance its brand visibility and expand its customer base. Other revenue sources include advertising and sponsorship deals facilitated through its digital platforms.
DraftKings Key Performance Indicators (KPIs)
Any
Average Revenue Per Unique Payer
Calculates the average income generated from each active user, reflecting monetization effectiveness and potential for revenue scaling.
Calculates the average income generated from each active user, reflecting monetization effectiveness and potential for revenue scaling.
Data provided by:
Main Street Data
Main Street DataDraftKings Financial Statement Overview
Summary
DraftKings shows strong revenue growth and improved cash flow management, which are positive signs for its financial health. However, ongoing challenges with profitability and high leverage pose risks to long-term stability.Income Statement
DraftKings shows a strong revenue growth trajectory, with a Revenue Growth Rate of 30.1% from 2023 to 2024. However, profitability metrics like Gross Profit Margin (38.1%) and Net Profit Margin (-10.6%) indicate ongoing challenges in achieving profitability. The negative EBIT and EBITDA margins suggest the company is still facing operational losses, although there is a notable improvement in net income compared to prior years.65
Positive
Balance Sheet
The balance sheet reveals potential areas of concern with a high Debt-to-Equity Ratio of 1.32, indicating significant leverage. However, the company has a substantial equity base with an Equity Ratio of 23.6%, providing some stability. Return on Equity (ROE) remains negative at -50.2%, reflecting ongoing profitability challenges.55
Neutral
Cash Flow
There is a strong improvement in cash flow, with Free Cash Flow turning positive in 2024. The Free Cash Flow Growth Rate is significant, and the Operating Cash Flow to Net Income Ratio of 0.82 suggests improved cash generation relative to net income. This indicates better cash management despite previous years of negative free cash flow.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.77B | 3.67B | 2.24B | 1.30B | 614.53M | Gross Profit |
| 1.82B | 1.37B | 756.19M | 501.86M | 267.94M | EBIT |
| -609.00M | -789.23M | -1.51B | -1.56B | -843.26M | EBITDA |
| -311.76M | -586.65M | -1.27B | -1.40B | -729.44M | Net Income Common Stockholders |
| -507.29M | -802.14M | -1.38B | -1.53B | -843.70M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 788.29M | 1.27B | 1.31B | 2.15B | 1.82B | Total Assets |
| 4.28B | 3.94B | 4.04B | 4.07B | 3.44B | Total Debt |
| 1.34B | 1.35B | 1.32B | 1.32B | 81.61M | Net Debt |
| 546.79M | 75.58M | 15.52M | -834.28M | -1.74B | Total Liabilities |
| 3.27B | 3.10B | 2.72B | 2.39B | 742.54M | Stockholders Equity |
| 1.01B | 840.31M | 1.32B | 1.68B | 2.70B |
| Cash Flow | Free Cash Flow | |||
| 407.59M | -115.14M | -729.16M | -517.78M | -385.57M | Operating Cash Flow |
| 417.77M | -1.75M | -625.52M | -419.51M | -337.88M | Investing Cash Flow |
| -566.60M | -90.36M | -208.77M | -195.02M | -227.34M | Financing Cash Flow |
| -144.47M | -63.22M | -16.73M | 1.14B | 2.31B |
DraftKings Technical Analysis
Negative
34.87
Price Trends
35.28
Negative
38.50
Negative
38.39
Negative
Market Momentum
0.23
Positive
47.26
Neutral
9.65
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 34.87 is below the 20-day moving average (MA) of 35.37, below the 50-day MA of 35.28, and below the 200-day MA of 38.39, indicating a bearish trend. The MACD of 0.23 indicates Positive momentum. The RSI at 47.26 is Neutral, neither overbought nor oversold. The STOCH value of 9.65 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DKNG.
DraftKings Risk Analysis
DraftKings disclosed 10 risk factors in its most recent earnings report. DraftKings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Stock repurchases under our stock repurchase program are discretionary, and we cannot guarantee that our stock repurchase program will achieve the desired objectives. Share repurchases diminish our cash reserves and could also increase the volatility of the trading price of our Class A common stock. Q4, 2024
DraftKings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $5.95B | 11.93 | 35.62% | 0.94% | 6.06% | 10.05% | |
71 Outperform | $2.70B | 152.20 | 11.87% | ― | 29.86% | ― | |
63 Neutral | £42.08B | 82.31 | 5.48% | ― | ― | ― | |
62 Neutral | $6.84B | 11.22 | 2.83% | 3.93% | 2.65% | -21.93% | |
59 Neutral | $5.76B | ― | -5.56% | ― | -1.25% | -130.83% | |
58 Neutral | $31.01B | ― | -46.78% | ― | 22.86% | 30.40% | |
48 Neutral | $2.27B | ― | -2.81% | ― | 5.51% | 92.46% |
* Consumer Cyclical Sector Average
Performance Comparison
DKNG
DraftKings
35.08
-5.73
-14.04%
BYD
Boyd Gaming
73.04
21.84
42.66%
PENN
Penn National Gaming
15.08
-0.95
-5.93%
CZR
Caesars Entertainment
27.69
-5.94
-17.66%
RSI
Rush Street Interactive
11.83
3.15
36.29%
FLUT
Flutter Entertainment PLC
240.98
36.87
18.06%
DraftKings Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -1.36%|
Next Earnings Date:Aug 01, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong growth in revenue and operational efficiency, as well as a healthy balance sheet and significant progress in live betting. However, customer-friendly outcomes impacted revenue and EBITDA negatively, leading to a downward revision in fiscal year guidance. Challenges in specific markets also contributed to the headwinds.Q1-2025 Updates
Positive Updates
Strong Revenue Growth
DraftKings generated $1.409 billion of revenue in Q1 2025, representing 20% year-over-year growth.
Increased Sports Book Handle
Sports book handle increased 15% year-over-year to $13.9 billion, consistent with expectations.
Operational Efficiency
Promotional reinvestments were more efficient year-over-year, and adjusted gross margin increased more than 100 basis points to 45%.
Healthy Balance Sheet
DraftKings completed Q1 with $1.1 billion in cash after repurchasing 3.7 million shares.
Live Betting Growth
Live betting accounted for greater than 50% of total handle for the first time, indicating strong growth in this area.
Negative Updates
Impact of Customer-Friendly Outcomes
Customer-friendly outcomes in March led to a headwind of $170 million to revenue and $111 million to adjusted EBITDA.
Revised Fiscal Year Guidance
Fiscal year 2025 revenue guidance was revised down to $6.2 billion to $6.4 billion, and adjusted EBITDA guidance to $800 million to $900 million.
Challenges in Certain Markets
Maryland's increased tax rate and Jackpocket's shutdown in Texas and New Mexico were a combined headwind of $30 million to revenue and $26 million to adjusted EBITDA.
Company Guidance
During DraftKings' first quarter 2025 earnings call, the company shared several key metrics and updated guidance. Revenue grew by 20% year-over-year to $1.409 billion, and adjusted EBITDA reached $103 million. The sports book handle increased by 15% to $13.9 billion, with a structural sports book hold percentage of 10.4%, up 50 basis points from the previous year. However, customer-friendly sports outcomes, particularly in March, led to a lower actual hold percentage of 9.5%. Despite this, DraftKings maintained a strong balance sheet with $1.1 billion in cash. For fiscal year 2025, the company revised its revenue guidance to between $6.2 billion and $6.4 billion and adjusted EBITDA to between $800 million and $900 million. The company also anticipates a sports book net revenue margin of 7% to 7.5% and expects free cash flow to reach approximately $750 million.DraftKings Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
DraftKings Secures $600 Million Term Loan for Growth
Positive
Mar 4, 2025
On March 4, 2025, DraftKings Inc. announced the closing of a $600 million senior secured term loan B credit facility, increased from an initially planned $500 million due to strong demand. The loan, maturing in March 2032, will be used for general corporate purposes and reflects DraftKings’ strategic financial positioning and growth ambitions in the competitive sports betting and gaming industry.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.