DraftKings hits new 52-week high after investor day
DraftKings (NASDAQ: DKNG ) was up 4.13% today on volume nearly double its daily average, hitting a new 52-week high after the gaming company made bullish comments during its investor day.
After raising its 2023 earnings before interest, taxes, and depreciation (EBITDA) and revenue estimates earlier this month while issuing strong 2024 guidance, DraftKings today provided 2023 guidance that analysts and investors alike expressed enthusiasm for.
The online sports betting provider expects revenue of around $5 billion and adjusted EBITDA of $900 million in 2025, with those figures rising to $6.2 billion and $1, respectively, the following year, an expected $4 billion increase. By 2028, the operator expects revenue of $7.1 billion and EBITDA of $2.1 billion.
We will not let our guard down," said DraftKings CEO Jason Robins."We believe our speed and pace of product innovation will continue to be faster than any other operator in the U.S. online gaming space . "
Overall, Sell-side analysts were enthusiastic about DraftKings' investor day comments. Piper Sandler said it was "impressed" with estimates for the gaming company but reiterated its "overweight" rating and $40 price target on the stock. Craig-Hallum agreed, reaffirming a buy rating on the stock while raising its stock price estimate to $45 from $40. DraftKings closed today just over $37.
DraftKings has strong growth prospects
DraftKings recently told analysts and investors that it is the leading provider of total iGaming and online sports betting revenue share in the United States. But there's plenty of room to grow. For example, based solely on the states in which it currently operates, the operator expects the total addressable market to grow to $30 billion by 2028, up from $20 billion today.
Translation: Robbins noted that as more states approve online gambling or sports betting, it will "drive significant revenue growth and incremental long-term Adjusted EBITDA and improve our long-term Adjusted EBITDA margin ".
By 2024, DraftKings is expected to be available in 25 states and Puerto Rico, and iGaming will be available in 5 jurisdictions. Robbins "definitely wants more states to legalize OSB and iGaming." He noted that at least eight states are enacting sports betting laws and that online casinos are billing a similar number.
Currently, Georgia is considered the only major state that could approve sports betting next year, and the path to success for broader online gambling legislation is unclear. Operators don’t necessarily need to add new states, as states that have long allowed iGaming, sports betting, or both have seen significant growth in these areas. Robbins pointed to New Jersey as an example.
“New Jersey adopted OSB more than five years ago and iGaming about 10 years ago and is still experiencing very strong year-over-year growth,” he said. "This year, we expect New Jersey's gross gaming revenue to grow approximately 25 percent. The share of adults participating in the online gaming category is increasing and existing players are becoming more engaged over time."
DraftKings products continue to evolve
In the world of iGaming and online sports betting, evolving products are crucial to attracting and retaining customers. With this in mind, operators have achieved great success with Same Game Parlay (SGP). DraftKings is building on this with the upcoming launch of progressive parlays.
At the Investor Day, Robbins discussed the operator's progressive odds program, which will allow bettors to be compensated even if one or more parts of their bet fails.
“We are excited about our progressive parlay product and its potential to generate higher parlay combinations and bets, and therefore higher holding rates.
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Source: www.casino.org
