Hot gambling stock DraftKings falls 6% after company reports larger loss than expected
DraftKings sank more than 5% in premarket trading Friday after it said its loss for the second quarter widened despite strong revenues and a turnaround in user engagement.
The Boston-based gambling company posted a second-quarter loss of $161.4 million, or 55 cents per share, compared to a loss of $28.11 million, or 15 cents per share, the same quarter last year. Analysts polled by Dow Jones had expected a per-share loss of 20 cents.
The company’s worst-than-expected income figures came as Covid-19 continued to derail scores of professional and college sports leagues as efforts to contain the coronavirus force athletes and fans home.
Shares fell 6% in morning trading after the release of the earnings report.
Though the popular stock has more than tripled this year, shares have come under pressure again in recent weeks as some college football leagues decided to cancel their 2020 seasons. Both the Big Ten and the Pac-12, two college football leagues, announced earlier this week that they will postpone fall sports due to the coronavirus.
But CEO and co-founder Jason Robins said in a press release that the company’s focus on delivering new and innovative offerings should lead to healthier financial figures as sporting events slowly resume.
“In the second quarter, while several major sports leagues including the NBA, MLB and the NHL remained on hiatus due to COVID-19, the Company worked creatively to engage fans with new fantasy sports and betting products for NASCAR, golf, UFC, and European soccer,” DraftKings said in a release accompanying its earnings.
A recent addition to the public markets, DraftKings in April combined with Diamond Eagle Acquisition Corp., a special purpose acquisition company, and gaming technology provider SBTech. The move allowed it to circumvent the typical initial public offering process.
Its second-quarter earnings report was only its second quarterly results filing as a public company.
Signs of early regrowth may already be evident in the company’s top line, which topped analysts’ expectations in the second quarter. Revenue rose to $70.9 million from $57.4 million, ahead of the consensus Dow Jones forecast for $66.4 million.
DraftKings ended the quarter with $1.2 billion in cash and no debt on its balance sheet. The company also said it expects 2020 pro-forma revenue of $500 million to $540 million, sales that would represent 22% to 37% growth in the second half of the year.
“As sporting events began to resume, the Company saw increased engagement with its sports-based product offerings, which contributed to sequential monthly revenue improvement during the second quarter,” the company added. “This positive momentum has accelerated with the return of MLB, the NBA, WNBA, the NHL, and MLS.”
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