DraftKings Shares Plunge As Customer Growth Disappoints

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by Tyler Durden
Friday, Feb 18, 2022 - 01:45 PM

DraftKings Inc. shares tumbled premarket after adding fewer users for the fourth quarter than Wall Street expected. 

Shares are down about 15% after the company said an average of 2 million monthly unique users used the sports betting app. Analysts were predicting upwards of 2.1 million. 

The company also forecasted a 2022 adjusted Ebitda guidance for a loss between $825 million to $925 million -- far greater than the highest forecast on Wall Street of $739 million. Highlights from today's earnings release are provided by Bloomberg:

  • The company says it had 2 million monthly unique paying customers during each month of the quarter, on average, slightly missing estimates for 2.1 million.
  • It introduced 2022 adjusted Ebitda guidance for a loss between $825 million and $925 million, far bigger than estimates for a loss of about $699 million and the highest forecast for a loss of $739 million, data compiled by Bloomberg show.
  • DraftKings did boost its 2022 revenue forecast to $1.85 billion to $2 billion from $1.7 billion to $1.9 billion.
  • Management said that 2022 expectations reflect the launch of mobile betting in New York and Louisiana, but doesn't include any impact from new state launches after Feb. 18.
  • CFO Jason Park said the fourth-quarter revenue beat came "despite lower-than-expected hold in October primarily due to NFL game outcomes."

"In the present environment where tech investors have displayed zero tolerance for large losses, the 2022 Ebitda guidance is going to be a disappointment," Vital Knowledge analyst Adam Crisafulli said.

DraftKings CFO Jason Park said revenue grew about 47% YoY in the quarter "despite lower-than-expected hold in October primarily due to NFL outcomes." 

Through Thursday's close, shares in the Boston-based company sank 63% to a 52-week low. 

Cathie Wood's ARK Innovation ETF has a sizable position in DraftKings. It's the fund's 15th largest holding. 

DraftKings sparked pessimism across the sports betting industry this morning, sending Flutter Entertainment, which owns FanDuel, down 4% in European trading and Penn National Gaming down around 3%. 

Even though the company reported fewer users and a larger loss projected for 2022 than expected, CEO Jason Robins told investors during an earnings that the company's momentum in growth is increasing in the first quarter and controls about 32% of the sports betting world.