DraftKings (DKNG) stock declined about 6% in yesterday’s extended trading session after reporting a wider-than-expected Q3 loss. Meanwhile, the revenues came in line with analysts’ expectations. Further, the company lowered its full-year revenue and adjusted its EBITDA outlook, which hurt investor sentiment.
DKNG provides digital sports entertainment and gaming services. For a thorough assessment of the stock, go to TipRanks’ Stock Analysis page.
A Closer Look at DKNG’s Q3 Performance
DraftKings reported Q3 revenue of $1.1 billion, up 39% year-over-year. The reported figure came in line with the Street’s forecast. The company attributed its yearly revenue growth to higher customer engagement, the expansion of its Sportsbook product into new markets, and the acquisition of Jackpocket, completed in May.
Looking at the company’s key metrics, its Monthly Unique Payers (MUPs) increased by 55% year-over-year to 3.6 million. However, the average revenue per MUP declined 10% to $103 due to the impact of the Jackpocket acquisition.
Meanwhile, the company posted a net loss of $0.60 per share compared to a loss of $0.61 in the prior year quarter. It compared unfavorably to the consensus estimates of a loss of $0.4 per share.
DKNG Lowers Q4 Outlook
DraftKings lowered its 2024 revenue guidance. The company now expects sales in a range of $4.85 billion to $4.95 billion, down from the previous forecast of $5.05 billion to $5.25 billion. The new outlook still represents 32% to 35% year-over-year growth.
Further, DKNG revised its 2024 adjusted EBITDA guidance to a range of $240 million to $280 million, significantly lower than its prior forecast of $340 million to $420 million.
For 2025, DraftKings provided revenue guidance of $6.2 billion to $6.6 billion, reflecting a year-over-year growth of nearly 31%. Further, the company expects its adjusted EBITDA guidance for 2025 between $900 million and $1 billion.
Is DraftKings Stock a Good Buy?
Turning to Wall Street, DKNG has a Strong Buy consensus rating based on 21 Buys and two Holds assigned in the last three months. At $49.08, the average DraftKings price target implies a 25.91% upside potential. Shares of the company have gained about 28% in the past three months.
