DraftKings Gains on Higher 2021 Forecast, Strong Revenue
(Bloomberg) -- DraftKings Inc. gained as much as 8.4% Friday after boosting its revenue expectations for the year, another signal that sports betting isn’t slowing down.
The online gambling company expects $900 million to $1 billion in revenue for 2021, up from $750 million to $850 million. The raised guidance topped Wall Street expectations for $863 million and implies 40% to 55% growth compared with the year prior.
Boston-based DraftKings said the guidance assumes that all announced professional and college sports calendars go forward as planned. Major events ahead include college basketball’s March Madness and conference tournaments as well as the NBA and NHL playoffs.
“Monthly unique players being up almost 50% is really incredible,” Jason Ader, chief executive officer of SpringOwl Asset Management, said by telephone. “The numbers are exceeding expectations and the total addressable market is growing, so it’s exciting.”
DraftKings CEO Jason Robins said in an interview that a lot of external factors went favorably for the company, including a higher win percentage from customers, the extension of mobile-player registrations in Illinois and the introduction of sports betting in Tennessee, which ended up being one of the best initial launches the company has had.
He said the pandemic, which has left many people stuck at home without their usual array of entertainment options, is also a factor.
“All online businesses, whether it’s us or Amazon, are seeing some tailwind because people are home and they’re not distracted by other things,” Robins said.
DraftKings reported a 44% increase in monthly unique players, to 1.5 million, as a rise in states offering legal gambling drew new users. The growth in monthly players, which beat the highest analyst forecast of 1.45 million, was in part fueled by growth for traditional online gambling, mobile sports betting and daily fantasy sports users.
DraftKings’ stock was up 7.4% to $62.06 at 12:59 p.m. in New York. The shares had climbed 230% since the April debut through Thursday’s close, outperforming the S&P 500’s 37% gain.
Fourth-quarter revenue of $322 million beat the consensus analyst estimate of $233 million, as compiled by Bloomberg. That’s the third time the company has topped revenue expectations since it went public via a reverse merger in April.
“We are raising our revenue outlook for 2021 due to our expectation for continued growth, the outperformance of our core business and newly launched states that were not included in our previous guidance,” Robins said in a statement.
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