DraftKings (NASDAQ:DKNG) is scheduled to report fourth-quarter 2022 earnings on February 16, after the market closes. The online sports betting company’s top line is expected to have benefitted from the 2022 FIFA World Cup that took place during the quarter.
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Furthermore, the company expanded its presence in new states in Q4 while adding new features to enhance product offerings. These factors are likely to have resulted in customer expansion in the to-be-reported quarter.
Nevertheless, higher investments in expansion into new states and high marketing costs are likely to have impacted the company’s bottom-line growth to some extent.
Analysts currently expect DraftKings to post a Q4 loss of $0.62 per share, compared with a loss of $0.80 in the prior-year period. Meanwhile, revenue expectations are pegged at $798.1 million, representing an impressive year-over-year jump of 68.6%.
Website Traffic Shows Promise
DraftKings is solely an online operator, so the total number of website visits can be a good indicator of user involvement on its platform. As per the TipRanks Website Traffic tool, total global visits to draftkings.com climbed 20.3% year-over-year in the to-be-reported quarter.
The increase in monthly visits could indicate that demand for the company’s products remained strong during the quarter.
Is DraftKings a Good Stock to Buy Now?
Ahead of the company’s Q4 earnings release, Roth Capital analyst Ed Engel downgraded the stock’s rating to Sell from Hold, with a $15 price target on DKNG stock. The analyst is of the opinion that DraftKings may provide poor guidance for EBITDA in the first quarter of 2023 due to the increased investments in new state launches.
Overall, DKNG has a Moderate Buy consensus rating. This is based on seven Buy, four Hold, and two Sell recommendations. The average stock price target of $17.75 implies 6.9% upside potential from the current level. Shares of the company are up 7.7% in the past three months.
Concluding Thoughts
The company’s expansion moves and product development efforts bode well for long-term growth. Also, DraftKings stands to gain from a rise in the number of U.S. states that have legalized sports betting. Investors, however, are likely to keep a close watch on management’s commentary on achieving positive adjusted EBITDA.
