Shares in DraftKings gained in early trading after the major sports betting outfit raised its 2020 revenue guidance and reported third-quarter earnings that exceeded Wall Street analysts’ expectations.
The stock is below its late-September peak of $64.19, but climbed 7% to pass $44 amid optimism that the return of sports would see the company through to a less pandemic-dominated 2021.
DraftKings now expects revenue this year of $540 million to $560 million, up more than 25% from 2019 pro-forma levels and higher than its previous guidance of $500 million to $540 million. The company had its IPO earlier this year after a three-way merger engineered via a special purpose acquisition company, or SPAC, led by Hollywood veterans Harry Sloan and Jeff Sagansky. Sloan serves as chairman of DraftKings. The combination with the two other firms, Diamond Eagle and SBTech, means that quarterly results are reported on a pro-forma basis.
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Revenue in the quarter climbed 42% from prior-year levels to reach $133 million, ahead of Wall Street analysts’ consensus forecast.
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The company said more than 1 million monthly unique paying customers were engaged with DraftKings each month during the third quarter, up 64% from the same period in 2019.
In raising its revenue outlook, DraftKings said it is assuming the plans for sports leagues are maintained through the end of the year. College football, though, is a major question mark. Ohio State, a national power, may end up playing only five games this season after canceling Saturday’s game with Maryland due to a coronavirus outbreak. Nationwide, at least 18 college games have been canceled or postponed. programs had to cancel or postpone at least 18 games in the first half of November due to Covid-19 outbreaks. College basketball could face similar challenges.
Despite the uncertainties in the current environment, it has improved since the early days after DraftKings went public. At that point, the company contended with a near-complete shutdown of sports around the world due to COVID-19. In March and April, the company resorted to substituting wagers on reality TV series and eSports competitions for its usual bread and butter of baseball, basketball and the like.
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