DraftKings’ impressive performance in the first quarter and an upward revision to its 2023 guidance seem to have boosted investors’ confidence in the stock.
Shares of DraftKings $DraftKings Inc.(DKNG)$ , a sports entertainment and gaming company, gained 9.8% in after-hours trading. The company’s positive first-quarter results and improved 2023 guidance were well received by investors.
It is noteworthy that the company benefited from the expansion of its Sportsbook and iGaming products into new jurisdictions and lower promotional activities. Furthermore, the top-line growth was driven by new customer acquisition and product innovation, which supported customer retention.
Revenues were $769.7 million, up 56.6% year-over-year, and beat the Street’s expectations of $704.3 million. Meanwhile, the company delivered an adjusted loss of $0.51 per share, which surpassed the consensus estimate of a loss of $0.87 per share. Also, it came below the prior-year loss of $0.74 per share.
In terms of key metrics, average monthly unique payers (MUPs) increased 39% year-over-year to 2.8 million, while average revenue per MUP advanced 35% in the first quarter to $92. Moreover, the company’s cash position weakened year-over-year. Cash and cash equivalents at $1,524.6 million were down 31.9%.
By Q1-end, DraftKings was live with mobile sports betting in 21 states, representing nearly 44% of the U.S. population.
DraftKings Raises 2023 Outlook
For 2023, DraftKings forecasts revenues to be within the $3.14-$3.24 billion range, higher than the $2.85-$3.05 billion estimated earlier. The revised expectation reflects a 40% to 44% rise from the previous year.
Also, the company forecasts adjusted EBITDA to be within the ($290) – ($340) million range versus the ($350)-($450) million range stated previously.
Analysts Weigh In
Following the Q1 release, two analysts maintained a Hold rating on DKNG stock, while two analysts, including JMP Securities’ Jordan Bender, reiterated a Buy rating.
Currently, Wall Street is cautiously optimistic about DKNG stock. It has a Moderate Buy consensus rating based on 14 Buy, seven Hold, and two Sell recommendations. The average stock price target of $22.90 implies an upside potential of 7.5%. The stock is up 93% so far in 2023.
To know the right time to buy and sell DraftKings, investors can follow the stock’s most accurate analyst (on a one-year timeframe), Jason Bazinet of Citigroup (C). Bazinet has had a 73% success rate over the past year, with an average return of 13.24% per transaction.
Comments