DraftKings Financial Results Beat Estimates but Stock Plummets

Q4 Results

DraftKings reported Q4 revenue of $473 million – a vast improvement from the $322 million reported in the same quarter last year, an increase of 47%.

https://twitter.com/DraftKingsNews/status/1494643382303526925

 “We grew revenue 47% year-over-year to $473 million in the fourth quarter despite lower-than-expected hold in October primarily due to NFL game outcomes.” Said Jason Park, DraftKings CFO. 

Areas of Growth

Monthly Unique Players

• “MUPs” in the B2C segment have increased 32% from the fourth quarter of 2020. DraftKings averaged 2 million unique paying customers during each month of Q4

• This signals strong player retention and customer acquisition tactics across Sportsbook and iGaming product offerings

• Average revenue per MUP also jumped to $77 in the fourth quarter, a 19% increase from 2020 reporting

Mobile Sports Betting Expansion

• DraftKings is now live in 17 states, coming on the heels of Louisiana and New York launches - Combined, these states account for 36% of the U.S. Population

• With future mobile launches in Ohio, Maryland, and Ontario in 2022, their market share will only increase

• The company also increased its presence in the iGaming segment with expansion to 5 U.S. states

https://twitter.com/ButlerBets/status/1494681163595755521

Product Enhancement and Offerings

• The company began offering Same Game Parlays in Q4 2021, a boon to their product portfolio

• DraftKings invested in their in-play technology by introducing Flash Bet – a live betting function that allows users to bet on the next occurrence in a game

• Lastly, the company created a loyalty program, ‘Dynasty Rewards’, which is available across all platforms and jurisdictions – enticing customers to play and earn more

Stock Implications

DraftKings stocks plummeted Friday morning despite their strong fourth quarter. However, with news that the company expects losses far into 2022, shareholders are not enthused. 

The company projects revenues of around $1.9 billion by the end of quarter two, but a larger adjusted loss between $825-$925 million – up from $676 million over 2021 collectively. 

Much of this can be attributed to the aggressive marketing tactics deployed to attract new consumers in the hyper-competitive sports betting market. 

Competing against the likes of FanDuel, who is backed by Irish sports gambling conglomerate Flutter, is a consistent threat.

However, due to state legalization trends, the company projects to be profitable by the fourth quarter of 2022. 

DraftKings shares have fallen more than 18% as of Friday morning but are expected to rebound as the company inches towards profit in 2022.

https://twitter.com/MazzNYC/status/1494692427529080837.

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