DraftKings may miss Q4 estimates on weak November, says Benchmark

Benchmark expects unfavorable sports results in November may present challenges to DraftKings’ expected growth in Q4, potentially leading to results that fall short of the consensus. The firm estimates November’s hold rates for online sports betting experienced a pressure of approximately 150 basis points. This could translate into a reduction of around $50M in revenue and $35M in adjusted EBITDA, relative to the midpoint of the company’s provided guidance range, the analyst tells investors in a research note. Benchmark is awaiting the final data for December, but says preliminary indications suggest the hold rate has returned to a normal level of about 9%. It believes pressure on the hold rate in November to be a temporary occurrence and keeps a Buy rating on the shares with a $41 price target.