Wall Street loves DraftKings despite Q1 losses
DraftKings is feeling the love from Wall Street investors since its stock went public and, despite posting losses of nearly $69 million in Q1, its stock just keeps rising. The little daily fantasy sports company (that was never interested in sports betting, remember?) is now poised to become a permanent and dominant force in the rapidly growing US sports betting market, whether there are sports to bet on or not.
Company CEO Jason Robbins spelled out DraftKings’ current state of affairs on an earnings call for investors late last week. While Robbins was pretty dodgy on a variety of subjects, he was quite bullish on the company’s big picture and investors seem to agree.
The biggest x-factors for DraftKings are the successful integration of the SBTech betting platform to their worldwide operations and the return of professional sports, particular the NFL, after the COVID-19 lockdown ends. American football is particularly important to DraftKings as it takes up the lion’s share of US betting and DFS remains a crucial DraftKings’ revenue source.
Though Robbins was notably vague about the impact of the COVID-19 lockdown on the company’s US expansion plans, he did sing the praises of lockdown e-sports, particularly Madden 20 simulations. That’s a lockdown sports replacement he doesn’t see going away, according to a report on LegalSportsBetting.com. “There is a group that just loves the NFL and can’t get enough of the NFL. So, I think if you can find a way to give them that NFL experience more year-round, there’s something there,” he said.
All told, DraftKing pulled in $88.5 million over the course of Q1 2020 an increase of 30 percent over the previous year. Their next report is certain to marked by the COVID-19 slump and the massive costs of customer acquisition. Nonetheless, Wall Street seems to love DraftKings.