DraftKings Inc (NASDAQ: DKNG) is up nearly 20% this morning after reporting strong results for its fourth financial quarter.
The sports betting company also expects its financial performance to remain strong as it continues to penetrate new states. DraftKings is now calling for revenue to fall between $2.85 billion and $3.05 billion this year on a narrower $350 million to $450 million of adjusted EBITDA loss.
Big events like Super Bowl, March Madness, and NCAA football championships will also help moving forward. According to CEO Jason Robins said:
Moving into 2023, we’ll continue to drive revenue growth and focus on expense management to accelerate our adjusted EBITDA growth. We’ve already taken several actions that resulted in an increased guidance.
Year-to-date, DraftKings stock is now up about 90%.
In the fourth quarter, DraftKings debuted in Kansas and Maryland. It also launched in Ohio on January 1st. In the earnings press release, CFO Jason Parks said:
We’re seeing strong customer retention and improved monetisation as promotional intensity declines in our more mature states. Our guidance reflects a slowdown in growth rate of our fixed costs as we capture efficiency and optimise organisation productivity.
The quarterly update arrives only days after Oppenheimer reiterates its “outperform” rating on DraftKings stock. The firm’s $23 price target suggests another 10% from here. Its research note said:
We like the setup into `23 on product improvements generating higher yields and a clear state launch road map providing opportunity to exhibit advertising leverage in vintage states (forecasting same-state incremental margins improving ~55%).
DraftKings ended the recent quarter with 2.6 million monthly unique payers (MUPs) – up 31%. Average Revenue per MUP also climbed 42% versus last year.
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