Benzinga - by Chris Katje, Benzinga Staff Writer.
Sports betting operator DraftKings Inc (NASDAQ:DKNG) will report fourth-quarter financial results after market close on Thursday, Feb. 15, 2024.
Here are the key earnings estimates, analyst comments and key items for investors to watch.
Earnings Estimates: Analysts expect DraftKings to report revenue of $1.242 billion in the fourth quarter, according to estimates from Benzinga Pro.
The revenue figure would be higher than the $855.13 million posted in the year prior period and follow three straight quarters of $750 million or more in revenue. DraftKings has beaten revenue estimates from analysts in eight straight quarters.
Analysts expect DraftKings to post earnings per share of 8 cents in the fourth quarter, versus a loss of 53 cents per share in the year ago period.
DraftKings raised its fully year 2023 revenue guidance to a range of $3.67 billion to $3.72 billion during its third quarter financial results report.
Related Link: DraftKings Q3 Earnings Highlights: Shares Climb On Revenue, EPS Beat; Company Raises 2023 Guidance, Provides Initial 2024 Guidance
What Analysts Are Saying: Analysts are eagerly awaiting the fourth-quarter financial results, which come days after Super Bowl LVIII happened.
"We expect to hear more from DraftKings on Super Bowl trends on its earnings call on Friday," Piper Sandler analyst Matt Farrell said.
The analyst has an Overweight rating and raised the price target from $40 to $50.
Farrell said industry trends are favorable for the Super Bowl, with more people expected to place bets on the NFL championship game. The analyst also sees an announced partnership between DraftKings and Barstool Sports as a positive.
"The Chiefs' outright win was an unfavorable outcome for DraftKings from our perspective. However, it does appear outcomes may have been a bit more balanced regarding various props."
Improving margins and strong competitive dynamics are expected from DraftKings by Oppenheimer analyst Jed Kelly.
The analyst has an Outperform rating and raised the price target from $44 to $55.
Kelly expresses caution regarding the Super Bowl’s betting volume and the unpredictable revenue in March for DraftKings and other sports betting companies.
"We would take advantage of any potential pullbacks related to guidance semantics on solid profitability fundamentals," Kelly said.
The analyst noted that DraftKings and FanDuel are expanding their moats faster than competition in the sports betting space.
Key Items to Watch: The 2023 NFL season, playoffs and Super Bowl LVIII will likely be a key topic of discussion from the company and during the analyst question session.
"It continues to be a great time of year. I'm expecting big things and big growth this NFL season," DraftKings CEO Jason Robins told Benzinga ahead of the 2023 NFL season.
DraftKings, among other sportsbooks, featured Taylor Swift-themed prop bets for Super Bowl LVIII. The company might discuss how increased bets on Travis Kelce and Chiefs-related props could affect their first-quarter earnings.
The sports betting company previously announced fiscal year 2024 revenue guidance in a range of $4.50 billion and $4.80 billion. The company has raised guidance in several recent quarters, and a beat and guidance raise could be another bullish sign.
DraftKings is also approaching profitability and previously guided for adjusted EBITDA in the $350 million to $450 million range for fiscal year 2024. More commentary on getting to profitability could be an item to watch for investors and analysts.
During the earnings report or conference call, the company may discuss its recent partnership with Barstool Sports. Explaining DraftKings’ reasoning for the deal with the media company and its potential impact on attracting new users could provide analysts and investors with insights into the company’s future prospects.
Competition could also be a topic of discussion in the sports betting sector. ESPN Bet from PENN Entertainment (NASDAQ:PENN) launched operations in 17 states in November with heavy promotional activity. The company's launch may have impacted fourth quarter results for DraftKings.
Fanatics is also expanding its U.S. betting operations, and an uplisting to the New York Stock Exchange by FanDuel parent Flutter Entertainment (NYSE:FLUT) may bring more attention to DraftKings' biggest rival.
DKNG Price Action: DraftKings shares closed 2.1% lower at $42.69 on Tuesday, versus a 52-week trading range of $15.69 to $44.04. Shares of the sports betting company are up over 160% in the last year.
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