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DraftKings (DKNG)
NASDAQ:DKNG
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DraftKings
(NASDAQ:DKNG)
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Rating:52Neutral
Price Target:
$44.00
▲(2.52% Upside)
DraftKings' overall score is driven by strong revenue growth and improved cash flow management. However, profitability challenges and high leverage pose significant risks. The technical analysis suggests bearish momentum, while the earnings call provides a positive outlook with record growth but also highlights potential headwinds from increased taxes.
Positive Factors
Revenue Growth
Strong revenue growth indicates robust demand and effective market expansion, supporting long-term business sustainability.
Cash Flow Management
Improved cash flow management enhances financial flexibility and supports investment in growth opportunities.
iGaming Growth
Growth in iGaming reflects increased customer engagement and market penetration, contributing to diversified revenue streams.
Negative Factors
High Debt Levels
High leverage can strain financial resources and limit strategic flexibility, posing risks to long-term stability.
Profitability Challenges
Persistent profitability issues may hinder reinvestment in growth and affect overall financial health.
Competitive Pressures
Increased competition from prediction markets could erode market share and pressure margins, impacting long-term competitiveness.
DraftKings (DKNG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$38.20B
Dividend YieldN/A
Average Volume (3M)8.03M
Price to Earnings (P/E)―
Beta (1Y)1.77
Revenue Growth25.80%
EPS Growth27.64%
CountryUS
Employees5,100
SectorConsumer Cyclical
Sector Strength84
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)0.30
Shares Outstanding496,470,060
10 Day Avg. Volume9,144,538
30 Day Avg. Volume8,029,979
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.61
Enterprise Value/Revenue4.32
Enterprise Value/Gross Profit10.94
Enterprise Value/Ebitda-333.59K
Forecast
1Y Price Target
$55.28Price Target Upside28.80% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering27
DraftKings Business Overview & Revenue Model
Company DescriptionDraftKings 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 MoneyDraftKings 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 Key Performance Indicators (KPIs)
Any
Average Revenue Per Unique Payer
Measures the average amount of money each active user spends, indicating the monetization effectiveness and potential for revenue growth from the existing customer base.
Measures the average amount of money each active user spends, indicating the monetization effectiveness and potential for revenue growth from the existing customer base.
Data provided by:
Main Street Data
Main Street DataDraftKings Earnings Call Summary
Earnings Call Date:Aug 06, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 31, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in revenue and adjusted EBITDA, strong performance in the Sportsbook and iGaming segments, and maintained fiscal guidance. However, challenges such as higher tax rates and uncertainties in prediction markets and Illinois present potential headwinds.Q2-2025 Updates
Positive Updates
Record Revenue and Adjusted EBITDA
DraftKings set records for revenue and adjusted EBITDA in the second quarter, with revenue increasing 37% year-over-year to $1.513 billion and adjusted EBITDA reaching over $300 million, doubling their prior record.
Strong Sportsbook Performance
Sportsbook net revenue increased 45% year-over-year, with net revenue margins setting a company record at 8.7%. Sportsbook handle increased 6% year-over-year to approximately $11.5 billion.
iGaming Growth
iGaming net revenue increased 23% year-over-year, driven by strong growth in active iGaming customers and increased engagement with jackpots.
Fiscal Year Guidance Maintained
DraftKings maintained its fiscal year 2025 revenue guidance of $6.2 billion to $6.4 billion and adjusted EBITDA of $800 million to $900 million, anticipating revenue close to the high end of the range.
Capital Allocation and Share Repurchase
DraftKings repurchased 6.5 million shares through its stock repurchase program and continues to invest in organic growth initiatives.
Negative Updates
Impact of Higher Tax Rates
DraftKings anticipates financial impacts from higher tax rates in New Jersey, Louisiana, and Illinois, which could affect profitability.
Challenges in Prediction Markets
DraftKings is in a 'monitor mode' regarding federally regulated prediction markets, with uncertainty around technology components and stakeholder relationships.
Illinois Wager Tax Concerns
The implementation of a pass-through tax in Illinois presents challenges, with potential impacts on market share and market size yet to be determined.
Company Guidance
During the Q2 2025 earnings call, DraftKings provided guidance for the fiscal year, maintaining their revenue expectations between $6.2 billion and $6.4 billion and adjusted EBITDA in the range of $800 million to $900 million. The company anticipates revenue to be closer to the high end of this range, driven by a 37% year-over-year revenue growth in the second quarter, reaching $1.513 billion. Adjusted EBITDA was over $300 million, with a 20% margin, doubling their prior record. DraftKings expects their Sportsbook net revenue margin to exceed 7.5%, an increase from the previous guidance range of 7% to 7.5%, and an adjusted gross margin of 46%. The guidance also factors in the anticipated financial impacts of launching mobile sports betting in Missouri later this year and higher tax rates in states such as New Jersey, Louisiana, and Illinois.DraftKings Financial Statement Overview
Summary
DraftKings shows strong revenue growth but struggles with profitability due to negative margins. The high debt-to-equity ratio indicates financial risk, though improvements in cash flow management provide a positive outlook.Income Statement
DraftKings shows a positive revenue growth trend with an 8.16% increase in TTM, indicating strong market demand. However, the company struggles with profitability, as evidenced by negative net and EBIT margins, reflecting ongoing operational challenges.55
Neutral
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio of 1.32, suggesting significant leverage and potential financial risk. The negative return on equity indicates that the company is not generating profit from its equity base, which is a concern for investors.45
Neutral
Cash Flow
Cash flow analysis shows improvement with a 41.96% growth in free cash flow, indicating better cash management. The free cash flow to net income ratio above 1 suggests efficient cash generation relative to net income, despite negative operating cash flow coverage.60
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.41B | 4.77B | 3.67B | 2.24B | 1.30B | 614.53M |
| Gross Profit | 2.13B | 1.82B | 1.37B | 756.19M | 501.86M | 267.94M |
| EBITDA | -70.00K | -319.35M | -586.65M | -1.27B | -1.40B | -729.44M |
| Net Income | -304.47M | -507.29M | -802.14M | -1.38B | -1.53B | -843.70M |
Balance Sheet | ||||||
| Total Assets | 4.47B | 4.28B | 3.94B | 4.04B | 4.07B | 3.44B |
| Cash, Cash Equivalents and Short-Term Investments | 1.26B | 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 | 3.46B | 3.27B | 3.10B | 2.72B | 2.39B | 807.98M |
| Stockholders Equity | 1.01B | 1.01B | 840.31M | 1.32B | 1.68B | 2.63B |
Cash Flow | ||||||
| Free Cash Flow | 558.75M | 407.59M | -115.14M | -729.16M | -517.78M | -385.57M |
| Operating Cash Flow | 513.68M | 417.77M | -1.75M | -625.52M | -419.51M | -337.88M |
| Investing Cash Flow | -184.34M | -566.60M | -90.36M | -208.77M | -195.02M | -227.34M |
| Financing Cash Flow | 161.14M | -144.47M | -63.22M | -16.73M | 1.14B | 2.31B |
DraftKings Technical Analysis
Negative
42.92
Price Trends
44.95
Negative
41.68
Positive
40.41
Positive
Market Momentum
-0.67
Positive
37.51
Neutral
31.44
Neutral
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 42.92 is below the 20-day moving average (MA) of 45.08, below the 50-day MA of 44.95, and above the 200-day MA of 40.41, indicating a neutral trend. The MACD of -0.67 indicates Positive momentum. The RSI at 37.51 is Neutral, neither overbought nor oversold. The STOCH value of 31.44 is Neutral, 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | 6.77B | 13.00 | 40.43% | 0.84% | 6.40% | 26.09% | |
75 Outperform | 4.93B | 107.19 | 3.04% | ― | 26.99% | ― | |
71 Outperform | 6.50B | 49.11 | 20.29% | 2.07% | 26.85% | 1963.28% | |
61 Neutral | 2.87B | -34.63 | -10.88% | ― | 7.34% | 93.83% | |
59 Neutral | 49.27B | 137.43 | 3.28% | ― | ― | ― | |
52 Neutral | $38.20B | ― | -26.38% | ― | 25.80% | 27.64% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% |
* Consumer Cyclical Sector Average
Performance Comparison
DKNG
DraftKings
42.92
2.56
6.34%
BYD
Boyd Gaming
84.49
19.76
30.53%
PENN
PENN Entertainment
19.54
0.26
1.35%
GB:FLTR
Flutter Entertainment PLC
20,930.00
3,130.00
17.58%
RSI
Rush Street Interactive
21.61
10.89
101.59%
SGHC
Super Group (SGHC)
13.30
9.90
291.18%
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
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.