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DraftKings (DKNG)
NASDAQ:DKNG
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DraftKings
(NASDAQ:DKNG)
Rating:59Neutral
Price Target:
$45.00
▲(4.41% Upside)
Positive Factors
Financial Performance
DraftKings reported strong Q2 results, with total revenue and adjusted EBITDA both coming in well ahead of expectations.
Market Position
DraftKings is strongly positioned to maintain its status as one of the leaders in the rapidly growing US online betting market.
Shareholder Confidence
DKNG repurchased 2.8 million shares, valued at approximately $100 million, indicating confidence in the company's future performance.
Negative Factors
Cost Challenges
Higher state taxes were a headwind for the company.
Launch Costs
Q2 upside is neutralized by the inclusion of Missouri launch costs and recent tax increases.
Regulatory Challenges
Regulatory pressures such as new per-bet fees and changes to tax loss offsets are likely to continue, posing challenges.
DraftKings (DKNG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$38.34B
Dividend YieldN/A
Average Volume (3M)9.27M
Price to Earnings (P/E)―
Beta (1Y)1.81
Revenue Growth25.80%
EPS Growth27.64%
CountryUS
Employees5,100
SectorConsumer Cyclical
Sector Strength71
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)0.30
Shares Outstanding496,470,060
10 Day Avg. Volume12,574,739
30 Day Avg. Volume9,265,001
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap0.61
Enterprise Value/Revenue4.67
Enterprise Value/Gross Profit12.18
Enterprise Value/Ebitda-120.29
Forecast
1Y Price Target
$54.69Price Target Upside26.89% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering28
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 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
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: -4.98%|
Next Earnings Date:Oct 31, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of strong financial performance with record-breaking revenue and EBITDA growth, alongside challenges such as increased tax burdens in key markets and uncertainties in prediction markets. The company's strategic initiatives in live betting and iGaming are showing positive momentum, though external factors like tax increases pose potential headwinds.Q2-2025 Updates
Positive Updates
Record-Breaking Revenue and Adjusted EBITDA
DraftKings set records for revenue and adjusted EBITDA in Q2 2025, with revenue growth accelerating by 37% year-over-year to $1.513 billion and adjusted EBITDA reaching over $300 million, doubling the prior record.
Sportsbook Net Revenue Increase
Sportsbook net revenue increased by 45% year-over-year, exceeding expectations, with a net revenue margin increase of over 230 basis points year-over-year, setting a company record at 8.7%.
Live Betting Handle Growth
Live betting handle increased by 16% year-over-year, indicating strong growth in this segment.
iGaming Net Revenue Growth
iGaming net revenue increased by 23% year-over-year, driven by strong growth in active iGaming customers.
Ongoing Share Repurchase Program
DraftKings repurchased 6.5 million shares through its stock repurchase program in the first half of the year, while continuing to invest in organic growth initiatives.
Negative Updates
Illinois Wager Tax Impact
The implementation of a per-wager tax in Illinois poses challenges as DraftKings plans to pass this tax on to customers, which could impact market dynamics and customer experience.
Higher Tax Rates in Key States
DraftKings anticipates financial impacts from higher tax rates in New Jersey, Louisiana, and Illinois, which could affect profitability.
Challenges in Prediction Markets
DraftKings is cautious about entering federally regulated prediction markets due to uncertainties and potential regulatory challenges.
Company Guidance
During DraftKings' Q2 2025 earnings call, the company provided guidance reflecting strong performance and a positive outlook. DraftKings achieved a record revenue of $1.513 billion, marking a 37% year-over-year increase, and an adjusted EBITDA of $301 million, representing a 20% margin. The company anticipates fiscal year 2025 revenue to be on the higher end of the $6.2 billion to $6.4 billion range, and adjusted EBITDA to be near the midpoint of the $800 million to $900 million range. Notably, Sportsbook net revenue margins are expected to exceed 7.5%, surpassing previous projections. DraftKings also highlighted the impact of Sportsbook-friendly outcomes, which added $110 million to revenue, and the strategic allocation of capital, including a stock repurchase of 6.5 million shares. The guidance incorporates the anticipated financial impacts of launching mobile sports betting in Missouri and higher tax rates in certain states, while not accounting for the potential launch of a predictions market offering.DraftKings Financial Statement Overview
Summary
DraftKings demonstrates strong revenue growth and improving cash flow dynamics, but faces ongoing profitability challenges. The balance sheet is moderately leveraged, showing the potential for financial stability. While the company is moving towards a more cash-efficient model, achieving consistent profitability remains essential for a more robust financial position.Income Statement
DraftKings exhibits strong revenue growth with a 35.47% increase from 2022 to 2023 and a further 4.9% in the trailing twelve months. However, profitability remains a challenge with negative net profit margins and EBIT margins, indicating ongoing losses. The gross profit margin is relatively healthy at 38.33% TTM, but overall profitability metrics suggest the company is yet to achieve sustainable profitability.55
Neutral
Balance Sheet
The balance sheet reflects a moderate level of leverage with a debt-to-equity ratio of 2.20 TTM, which is manageable for the industry but indicates reliance on debt. The equity ratio is 19.33% TTM, showing a stable proportion of equity financing. However, the negative return on equity at -45.66% TTM highlights inefficiencies in generating returns for shareholders.60
Neutral
Cash Flow
Cash flow analysis shows improvement with positive free cash flow and operating cash flow in the TTM, a significant recovery from previous negative figures. The operating cash flow to net income ratio is positive at 0.93, suggesting better cash management despite net losses. Free cash flow to net income ratio is also positive at 0.99, indicating improved cash flow generation relative to accounting losses.65
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 |
| EBITDA | -319.35M | -586.65M | -1.27B | -1.40B | -729.44M |
| Net Income | -507.29M | -802.14M | -1.38B | -1.53B | -843.70M |
Balance Sheet | |||||
| Total Assets | 4.28B | 3.94B | 4.04B | 4.07B | 3.44B |
| Cash, Cash Equivalents and Short-Term Investments | 788.29M | 1.27B | 1.31B | 2.15B | 1.82B |
| Total Debt | 1.34B | 1.35B | 1.32B | 1.32B | 81.61M |
| 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
Positive
43.10
Price Trends
41.60
Positive
38.34
Positive
39.65
Positive
Market Momentum
0.48
Positive
48.27
Neutral
7.79
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DKNG, the sentiment is Positive. The current price of 43.1 is below the 20-day moving average (MA) of 44.27, above the 50-day MA of 41.60, and above the 200-day MA of 39.65, indicating a neutral trend. The MACD of 0.48 indicates Positive momentum. The RSI at 48.27 is Neutral, neither overbought nor oversold. The STOCH value of 7.79 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
80 Outperform | $6.69B | 12.85 | 36.36% | 0.84% | 6.40% | 26.09% | |
73 Outperform | $4.24B | 92.11 | 27.07% | ― | 26.99% | ― | |
61 Neutral | $17.22B | 11.58 | -7.48% | 3.16% | 1.46% | -15.87% | |
59 Neutral | $38.34B | ― | -26.38% | ― | 25.80% | 27.64% | |
58 Neutral | $2.45B | ― | -2.50% | ― | 7.34% | 93.83% | |
50 Neutral | $4.99B | ― | -4.76% | ― | -0.15% | 28.05% | |
| ― | £37.62B | 132.72 | 3.76% | ― | ― | ― |
* Consumer Cyclical Sector Average
Performance Comparison
DKNG
DraftKings
43.10
11.04
34.44%
BYD
Boyd Gaming
83.40
27.67
49.65%
PENN
Penn National Gaming
17.09
-1.43
-7.72%
CZR
Caesars Entertainment
25.74
-9.04
-25.99%
GB:FLTR
Flutter Entertainment PLC
21,350.00
5,150.00
31.79%
RSI
Rush Street Interactive
19.19
10.15
112.28%
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.