Shares of DraftKings (NASDAQ:DKNG), a sports entertainment and gaming company, gained 9.8% in after-hours trading on Thursday. The company’s positive first-quarter results and improved 2023 guidance were well received by investors.
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It is noteworthy that the company benefited from the expansion of its Sportsbook and iGaming products into new jurisdictions and lower promotional activities. Furthermore, the top-line growth was driven by new customer acquisition and product innovation, which supported customer retention.
Revenues were $769.7 million, up 56.6% year-over-year, and beat the Street’s expectations of $704.3 million. Meanwhile, the company delivered an adjusted loss of $0.51 per share, which surpassed the consensus estimate of a loss of $0.87 per share. Also, it came below the prior-year loss of $0.74 per share.
In terms of key metrics, average monthly unique payers (MUPs) increased 39% year-over-year to 2.8 million, while average revenue per MUP advanced 35% in the first quarter to $92. Moreover, the company’s cash position weakened year-over-year. Cash and cash equivalents at $1,524.6 million were down 31.9%.
By Q1-end, DraftKings was live with mobile sports betting in 21 states, representing nearly 44% of the U.S. population.
DraftKings Raises 2023 Outlook
For 2023, DraftKings forecasts revenues to be within the $3.14-$3.24 billion range, higher than the $2.85-$3.05 billion estimated earlier. The revised expectation reflects a 40% to 44% rise from the previous year.
Also, the company forecasts adjusted EBITDA to be within the ($290) – ($340) million range versus the ($350)-($450) million range stated previously.
Analysts Weigh In
Following the Q1 release yesterday, two analysts maintained a Hold rating on DKNG stock, while two analysts, including JMP Securities’ Jordan Bender, reiterated a Buy rating.
Currently, Wall Street is cautiously optimistic about DKNG stock. It has a Moderate Buy consensus rating based on 14 Buy, seven Hold, and two Sell recommendations. The average stock price target of $22.90 implies an upside potential of 7.5%. The stock is up 93% so far in 2023.
To know the right time to buy and sell DraftKings, investors can follow the stock’s most accurate analyst (on a one-year timeframe), Jason Bazinet of Citigroup (C). Bazinet has had a 73% success rate over the past year, with an average return of 13.24% per transaction.
