DraftKings (DKNG) AI Stock Analysis

• Market Cap: $39.86B
• Dividend Yield: N/A
• Average Volume (3M): 8.72M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.84
• Revenue Growth: 22.86%
• EPS Growth: 30.40%
• Country: US
• Employees: 5,100
• Sector: Consumer Cyclical
• Sector Strength: 71
• Industry: Gambling, Resorts & Casinos
• EPS (TTM): -0.07
• Shares Outstanding: 496,285,640
• 10 Day Avg. Volume: 7,722,150
• 30 Day Avg. Volume: 8,720,837
• PEG Ratio: -2.47
• Price to Book (P/B): 24.67
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 55.04
• Enterprise Value/Market Cap: 0.57
• Enterprise Value/Revenue: 1.21
• Enterprise Value/Gross Profit: 11.75
• Enterprise Value/Ebitda: -22.88
• 1Y Price Target: $54.19
• Price Target Upside: 20.91% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 27

• Rating: 61 Neutral
• Price Target: $47.00 ▲(4.86%Upside)

DraftKings shows strong revenue growth and improving cash flow, but profitability remains a challenge. The stock's bullish technical momentum is tempered by valuation concerns, as the negative P/E ratio and lack of dividend yield highlight ongoing financial struggles. The earnings call provided a balanced outlook, with strategic initiatives in live betting providing potential upside, but revised guidance reflecting current market headwinds.

Positive Factors

Acquisition

DraftKings is reportedly in acquisition talks with Railbird Exchange, providing a high-margin, scalable entry point into underpenetrated states while avoiding state gaming and federal excise taxes.

Earnings

DraftKings is expected to report a significant Q2 earnings beat driven by better-than-expected net win margins.

Legislation

DraftKings is optimistic about future iGaming legislation due to constructive conversations and potential state funding needs.

Negative Factors

Legislative Risk

DraftKings could see some risk in New Jersey due to legislative momentum regarding tax rate increases.

Revenue Impact

Additional tax headwinds are modeled to slow down revenue to EBITDA flow-through from the mid-40’s to the high 30’s.

Tax Pressures

DraftKings faces additional tax pressures, which will result in a $70-80M headwind in each of the next two years.

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 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 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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 44.82
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Negative

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 44.82 is above the 20-day moving average (MA) of 43.03, above the 50-day MA of 39.35, and above the 200-day MA of 39.21, indicating a bullish trend. The MACD of 1.50 indicates Positive momentum. The RSI at 66.20 is Neutral, neither overbought nor oversold. The STOCH value of 81.95 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DKNG.

DraftKings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BYD	80 Outperform	$6.80B	13.64	35.62%	0.84%	6.06%	10.05%
RSI	72 Outperform	$3.35B	189.15	11.87%	―	29.86%	―
CZR	64 Neutral	$6.23B	―	-5.56%	―	-1.25%	-130.83%
Sector *	63 Neutral	$17.32B	10.90	-7.25%	3.10%	1.66%	-25.40%
DKNG	61 Neutral	$39.86B	―	-46.78%	―	22.86%	30.40%
PENN	58 Neutral	$2.77B	―	-2.81%	―	5.51%	92.46%
FLTR	―	£39.42B	96.41	5.48%	―	―	―

DraftKings Corporate Events

DraftKings Secures $600 Million Term Loan for Growth

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.