Why DraftKings shares plunged today
Shares of DraftKings (NASDAQ:DKNG) fell 28% on Friday after the daily leader in fantasy sports and games said its pace of expansion could slow markedly over the coming year.
DraftKings revenue soared 136% year-over-year to $502 million. The rollout of the company’s Sportsbook and iGaming products in newly legalized markets helped fuel the gains.
DraftKings monthly unique paying users grew to 1.6 million, up 22% from the prior year period. Still, that was below Wall Street estimates, which called for two million payers. This is also a marked deceleration from the 30% growth in paid users that DraftKings experienced in the second quarter.
Still, DraftKings’ average revenue per monthly paying user jumped 114% year-over-year to $100, in part due to higher revenue from betting on NFL games.
“Our team continued to drive revenue growth through highly effective customer engagement and compelling product and technology enhancements while remaining focused on our path to profitability,” CEO Jason Robins said in A press release.
That profitability, however, may be further away than investors would like. DraftKings generated a net loss of more than $450 million in the third quarter, compared to $545 million a year ago.
DraftKings raised its full-year revenue forecast to $2.16 billion to $2.19 billion for fiscal 2022 from a previous projection of $2.08 billion to $2.18 billion. . This would represent a growth of 67% to 69%.
Additionally, management now expects an EBITDA (earnings before interest, tax, depreciation and amortization) loss of $800-780 million, compared to its previous guidance of an $835-765 million loss. dollars. Still, DraftKings forecasts revenue growth to slow to 33% in fiscal 2023. It also forecasts an adjusted EBITDA loss of up to $575 million next year.
Still, CFO Jason Park said DraftKings remains on track to meet its profitability targets by the end of fiscal 2023. “Throughout 2022, we have struck the right balance between differentiated growth revenue and improving operational efficiencies,” Park said. . “We remain confident that we will achieve positive adjusted EBITDA in the fourth quarter of 2023 based on the visibility we have on planned state launches.”
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Joe Tenebruso has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.
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