Shares of DraftKings (DKNG), a firm that offers online sports betting, fantasy sports, and gaming platforms, fell in after-hours trading after it reported Q2-2024 earnings. This is despite the company beating EPS estimates, announcing a buyback program, and raising its revenue guidance for the year to $5.05-5.25 billion compared to $4.8-5.0 billion previously. The new revenue guidance suggests 38% to 43% growth.
Meanwhile, earnings per share came in at $0.22, which beat analysts’ consensus estimate of -$0.01 per share, but sales of $1.104 billion slightly missed the consensus estimate of $1.113 billion.
The company has a solid history of beating EPS estimates, as you can see below.
Notably, the company announced its inaugural $1 billion buyback program (about 5.6% of its current market cap), as it is “very excited” about its free cash flow trajectory. Additionally, average monthly unique payers rose to 3.1 million in Q2 2024, marking a 50% increase compared to Q2 2023.
Apart from the higher revenue, DraftKings expects the following for 2024:
- Adjusted EBITDA of $340-420 million for 2024 compared to the previous guidance of $460-540 million.
- 2025 adjusted EBITDA between $900 million and $1 billion, unchanged from the prior guidance.
The lowered adjusted EBITDA guidance for 2024 is a likely culprit for the share price drop.
Is DKNG Stock a Buy, According to Analysts?
On TipRanks, DKNG stock comes in as a Strong Buy based on 25 Buys, two Holds, and zero Sell ratings assigned in the past three months. The average DraftKings stock price target of $52.17 implies 47% upside potential.
