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The DraftKings Inc (DKNG): ExegesisDraftKings Inc (NASDAQ:DKNG) continues to expand its market presence with online sports betting now live in 21 states and iGaming in five states. The company faces potential threats from regulatory changes and intense competition in the online gaming and sports betting industry. DraftKings Inc (NASDAQ:DKNG) has opportunities for growth through strategic acquisitions and expansion into new markets. Founded in 2012, DraftKings Inc (NASDAQ:DKNG) has grown from a daily fantasy sports innovator to a leading player in the online sports and casino gambling industry. As of November 3, 2023, the company's latest SEC 10-Q filing reveals a dynamic business landscape with a mix of strengths, weaknesses, opportunities, and threats. This SWOT analysis aims to provide a comprehensive understanding of DraftKings' current position and future prospects. The company's financial performance shows a steady increase in revenue, reflecting its successful customer acquisition and retention strategies. Strengths Market Presence: DraftKings Inc (NASDAQ:DKNG) has a strong market presence, with online sports betting live in 21 states and iGaming in five states. This wide reach gives the company a competitive edge and access to a large customer base. The company's robust customer acquisition and retention strategies have contributed to its revenue growth, as evidenced by the $1,049.2 million increase in revenue for the nine months ended September 30, 2023, compared to the same period in 2022. Product Innovation: DraftKings Inc (NASDAQ:DKNG) has consistently demonstrated its ability to innovate and expand its product offerings. The company's portfolio now includes Sportsbook, iGaming, DFS, and other consumer products. This diversification not only enhances customer engagement but also provides multiple revenue streams for the company. Price Momentum DKNG is trading near the top of its 52-week range and above its 200-day simple moving average. What does this mean? Investors have been pushing the share price higher, and the stock still appears to have upward momentum. This is a positive sign for the stock's future value.
NASDAQ:DKNGLong
by DEXWireNews
DKNG DraftKings Options Ahead of EarningsIf you haven`t bought the dip on DKNG here: Then analyzing the options chain and the chart patterns of DKNG DraftKings prior to the earnings report this week, I would consider purchasing the 30usd strike price Calls with an expiration date of 2024-1-19, for a premium of approximately $1.93. If these options prove to be profitable prior to the earnings release, I would sell at least half of them. Looking forward to read your opinion about it.
NASDAQ:DKNGLong
by TopgOptions
$DKNG Solid Revenue Growth Will Eventually Lead to ProfitabilityOn a YTD basis, DraftKings Inc. (Nasdaq: DKNG) is up nearly 145% due to a mix of solid financial results, raising its full-year guidance, and delivering its first quarter of adjusted EBITDA profitability in Q2. With that in mind, the company’s Q3 earnings report will drop on November 2nd where I expect it to beat analysts’ revenue and EPS estimates, all while raising its full-year guidance again. As is, the NFL season is underway which is a seasonal catalyst for the company since Football is the most popular sport for wagers. Now that the company has a clear path toward profitability, DKNG stock could be a smart buy ahead of its Q3 earnings. DKNG Fundamentals NFL Season Will Further Improve Performance DraftKings has done a tremendous job this year growing its market share. According to data from last May, the online sportsbook dominated 32% of the market compared to 27.7% over the year prior. The significance of this growth is that it has been taking market share from its direct competitors. The sportsbook’s biggest competitor is FanDuel which held a 45.1% market share back in May. That said, this figure represents a slight YoY decline from 45.5% which shows that DKNG is a growing force in this market. Other competitors also lost market share as BetMGM’s market share shrank from 11.1% to 9.9%, Caesars’ dropped from 6% to 5%, and Barstool’s declined from 2.6% to 1.9%. What is more impressive is that DKNG was able to grow its market share at the same time its sales and marketing costs were declining. In Q2, the sportsbook’s sales and marketing costs decreased sequentially to $207.4 million from $389.1 million. At the same time, its revenues increased sequentially from $769.6 million to $874.9 million. The company achieving this feat is impressive considering the lack of highly followed sports events in Q2 except for the NBA playoffs. With the NFL season underway, DKNG can continue growing its revenues at the same impressive rate due to the popularity of betting on the NFL. A recent survey by the American Gaming Association found that a record 73.5 million Americans plan to place bets on the NFL this season. This figure represents a nearly 60% increase from a year ago which shows how popular betting on the NFL is. As DraftKing holds the second-largest market share in online sports betting, it is safe to assume that a large number of these bettors will place their wagers through the company’s platform. On that note, the first week of the NFL season indicates that the online sports betting industry may be in for a record season. GeoComply – a leading provider of location-based detection technology in the online sports betting industry – recorded 242.3 million geolocation transactions across regulated online sportsbook customers during week 1. This represents a 56% increase from the same period in 2022. Moreover, new research by the AGA found that the first week of the NFL saw 1.1 million new player accounts which is a 40% YoY increase. The increase in sports betting volume can be due to 3 major markets experiencing their first start to the NFL season which are Maryland, Massachusetts, and Ohio. Across these markets, the new NFL season added 61 thousand new accounts in Maryland, 59 thousand in Massachusetts, as well as a staggering 133 thousand in Ohio. In light of this, DKNG could stun Wall Street with a strong top-line and bottom-line beat considering that the NFL season started on September 7th. This means that the sportsbook received wagers on 49 games in Q3 spanning the first 3 weeks of the NFL season as well as week 4’s Thursday Night Football game. Q3 Forecast For its Q3 earnings, analysts expect DKNG to report revenue of $686.3 million and an EPS of -$0.69. That said, the online sportsbook may be poised to shatter these estimates as I’m forecasting its revenues to come at $924.9 million and its EPS to be -$0.53. In the first 2 quarters of 2023, DKNG’s revenue increased YoY by 84.48% and 87.68%. As such, I’ve used the average YoY increase in the first 2 quarters to project its YoY revenue growth in Q3. Based on an 84.27% YoY increase, the sportsbook’s revenue would amount to $924.9 million. Quarter Revenue YoY Growth Q1 22 $417,205,000 33.60% Q2 22 $466,185,000 56.65% Q3 22 $501,938,000 135.85% Q4 22 $855,133,000 80.67% Q1 23 $769,652,000 84.48% Q2 23 $874,927,000 87.68% Q3 23 $924,940,032 84.27% After projecting the company’s Q3 revenue, I expect its cost of revenue to be $583.2 million. In the Q2 earnings call, management raised its adjusted gross profit guidance from 42% – 45% to 43% – 45%. Considering that DKNG’s adjusted gross margin was 47% last quarter, I expect it to decline in Q3 in order to reach management’s expectations. As such, I used the average gross margin in Q1 and Q2 to reach the figure I’m projecting for the cost of revenue. Quarter Revenue Cost of Revenue Gross Profit Gross Margin Q1 23 $769,652,000 $521,740,000 $247,912,000 32.21% Q2 23 $874,927,000 $510,323,000 $364,604,000 41.67% Q3 23 $924,940,032 $583,251,338 $341,688,695 36.94% As for sales and marketing expenses, there is an apparent trend in the company’s financials in the last 2 years of this cost increasing in Q3 compared to Q2. This spike could be due to the company increasing its marketing efforts ahead of the beginning of the NFL season. Based on this trend, I calculated the average Q3 QoQ growth rate in sales and marketing expenses which is 70.3%. At this rate, DKNG’s Q3 sales and marketing expenses would be $353.5 million. Quarter Sales & Marketing QoQ Growth Q1 21 $228,686,000 Q2 21 $170,712,000 Q3 21 $303,658,000 77.88% Q4 21 $278,444,000 Q1 22 $321,452,000 Q2 22 $197,529,000 Q3 22 $321,714,000 62.87% Q4 22 $345,282,000 Q1 23 $389,133,000 Q2 23 $207,487,000 Q3 23 $353,502,460 70.37% Looking at the sportsbook’s product and technology costs, we can also find a pattern as the largest QoQ increase occurs in Q1 and is followed by smaller increases. Through this pattern, I calculated the average Q3 QoQ growth rate using data from the last 2 years to reach a projected Q3 growth rate of 1.48%. This would amount to $91.2 million in product and technology expenses. Quarter Product & Tech QoQ Change Q1 21 $56,159,000 Q2 21 $62,635,000 11.53% Q3 21 $65,222,000 4.13% Q4 21 $69,639,000 6.77% Q1 22 $81,352,000 16.82% Q2 22 $77,202,000 -5.10% Q3 22 $76,299,000 -1.17% Q4 22 $83,394,000 9.30% Q1 23 $88,088,000 5.63% Q2 23 $89,906,000 2.06% Q3 23 $91,236,887 1.48% The last operating expense remaining on DKNG’s income statement is G&A expense. This expense has been declining YoY since Q2 2022. With that in mind, these declines have been at a higher pace since Q4 2022. Therefore, I used the average YoY growth for the first 2 quarters of the year since they are better indicators of the company’s current performance. This means that I’m projecting G&A expense to decline 26.64% in Q3 which would amount to $136.6 million. Quarter G&A YoY Growth Q1 21 $168,997,000 Q2 21 $198,806,000 Q3 21 $219,706,000 Q4 21 $240,816,000 Q1 22 $216,606,000 28.17% Q2 22 $187,609,000 -5.63% Q3 22 $186,261,000 -15.22% Q4 22 $173,244,000 -28.06% Q1 23 $160,476,000 -25.91% Q2 23 $136,256,000 -27.37% Q3 23 $136,635,702 -26.64% By subtracting these costs from the projected revenue of $924.9 million, we can estimate DKNG’s operating loss to be around $239.6 million. Revenue $924,940,032 Cost of Revenue $583,251,338 Sales & Marketing $353,502,460 Product & Tech $91,236,887 G&A $136,635,702 Operating Loss -$239,686,354 For the rest of DKNG’s expenses, I used the average of the first 2 quarters given that they are better indicators of the company’s position at the moment. In this way, I’m projecting net interest income, remeasurement of warrant liabilities, other income, income tax provisions, and equity method investments to be $11.9 million, $18.5 million, $32 thousand, $1 million, and $221 thousand, respectively. Quarter Net Interest Remeasure. of Warrant Liab. Other Income/Expense Income Tax Equity Method Inv. Q1 23 $11,140,000 -$17,035,000 $19,000 $1,368,000 $119,000 Q2 23 $12,745,000 -$20,041,000 $45,000 $651,000 $323,000 Q3 23 $11,942,500 -$18,538,000 $32,000 $1,009,500 $221,000 Adding all of these figures together, we can reach my estimate for DKNG’s Q3 net loss of $247.4 million. With more than 463.9 million shares outstanding, this would amount to an EPS of -$0.533 – less than analysts’ estimate of -$0.699. Revenue $924,940,032 Cost of Revenue $583,251,338 Sales & Marketing $353,502,460 Product & Tech $91,236,887 G&A $136,635,702 Operating Loss -$239,686,354 Net Interest Income $11,942,500 Remeasure. of Warrant Liab. -$18,538,000 Other Income $32,000 Income Tax $1,009,500 Equity Method Inv. $221,000 Net Loss -$247,480,354 OS 463,974,787 EPS -$0.533 Risks While DKNG’s stock outlook appears to be bullish, there is a risk to the bull thesis. With interest rates at multi-decade highs, analysts expect consumer spending to slow down due to several factors including the resumption of student loan repayments, dwindling savings accounts, and banks tightening their lending standards. As such, bettors may reduce their wages in order to save funds which would impact DKNG’s revenue growth. Technical Analysis Looking at the hourly chart, DKNG stock is in a bearish trend with the stock trading in a downward channel. Looking at the indicators, the stock is below the 200 and 50 MAs which is a bearish sign, however, it recently broke through the 21 MA which could be an indication of a reversal soon. Meanwhile, the RSI is neutral at 49 and the MACD recently had a bearish crossover. As for the fundamentals, DKNG is set to share its Q3 financial results today, November 2nd, after market close. Considering the success of the early weeks of the NFL season whose impact should be reflected in Q3, the sportsbook may be on track to deliver a strong earnings beat while raising its full-year guidance. With the stock trading near support, bullish investors could find the current PPS a lucrative entry point. DKNG Forecast While DKNG stock being up nearly 150% YTD may lead some to believe that it’s overvalued, this is farther from the truth. The online sportsbook has been performing exceptionally so far this year as seen by its declining costs and growing revenues. With the company releasing its Q3 earnings on November 2nd, I expect it to beat analysts’ estimates for revenue and EPS for the fourth consecutive quarter while raising its full-year guidance due to the anticipated revenue growth. This growth will be mainly driven by the NFL season which is the most popular sport for bettors. With a clear path toward profitability due to revenue growth and more efficient cost management, DKNG stock could be a profitable long-term investment.
NASDAQ:DKNG
by Penny_Stocks_Today
$DKNG Rocky Mountains Ahead?Rocky Mountains is not a real thing, but it was the first term to come to mind when looking at this pattern. If this plays out, it would take weeks to months before anything comes of it. Simply charting this to reflect back on in the future to see what this pattern reveals. I'm simply playing hidden bullish divergence here, especially considering the fed with today's semi-hawkish tone out in Jackson Hole. Choppiness with potential to trade highs and lows. High Volatility = High Premium = High Risk = High Potential Wins = High Potential Losses.
NASDAQ:DKNG
by tmackk7121
DKNG - potential entry above 26.90DKNG has corrected back to a possible near term resistence-turned-support @ 26.50 - 26.80. Currently the bullish divergence between it's price and RSI is still intact (will be negated if price dips below its last pivot of 24.95). I would consider to test a long entry for DKNS if it starts to go above the last candle high of 26.89 with an initial SL just slightly below its last pivot low of 24.95. As swing trader, I will be trailing my stops on the way up should the trade works out. Disclaimer: Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is important! Take care and Good Luck!
NASDAQ:DKNGLong
by Juliac
1
$DKNG - Is the pullback done?NASDAQ:DKNG DraftKings could see a trendline check-back within an uptrend channel. It is currently sitting on the 50-day moving average and a Fibonacci support level. If the trend line fails to hold and the price falls below $25.60, we could see a further pullback. The $25.60 area should provide good support. Watch these price levels for potential support and reversal: - $25.60 to $26 - $23 - $21.71 (gap close) I will update the chart when there is a potential reversal.
NASDAQ:DKNG
by PaperBozz
DraftKings to go lower?DKNG met a long monthly down trend after a 250% rally from its lows and closed with what looks like a reversal pattern on the daily chart. Weekly THV is flat and Red as pricing continued to climb into the trend creating bearish divergence. Does Draft kings head back to $20 to meet the weekly coral or will it break out and head to $40? Time will tell. I'm personally shorting this. I explain why in the video. Covering both technical and social confluence and what I look for.
NASDAQ:DKNGShort
by allout06
3