DraftKings Inc (DKNG)

[John-Knee]

DraftKings: Fat Gross Margins & Huge Growth Runway

Samuel Smith
Jun 29, 2021, 06:55 AM

DraftKings Inc (DKNG) is a gaming and digital sports entertainment company with offerings that include sports betting, iGaming, and daily fantasy sports. It also engages in the development of casino gaming and sports betting software to facilitate online and retail sportsbook and casino gaming.

DraftKings divides its business pursuits into two business segments: Business-to-Business (B2B) and Business-to-Consumer (B2C), the latter of which generates the vast majority of the company’s revenue.

The main value for DKNG comes from its competitive positioning in the rapidly growing online gambling and U.S. sports betting industries, while also occupying a popular place in the larger fantasy sports industry.

In its most recent quarter, DKNG announced robust 175% revenue growth year-over-year while also significantly bolstering its balance sheet by issuing $1.1 billion in interest-free convertible notes due in 2028. Overall, in 2021 management is guiding for impressive 79% year-over-year revenue growth.

Long-term, management expects DraftKings to grow its $1.1 billion in estimated 2021 revenue by five to seven times, meaning that the company has a long growth runway ahead of it. (See DraftKings stock charts on TipRanks)


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