Luck was with sports bettors in November. This prompted J.P. Morgan analyst Joseph Greff to trim $79 million off his net-revenue projection for DraftKings’ fourth quarter, along with $55 million off its anticipated cash flow.
To be fair, Greff noted, October was a normal sports-wagering month and December was modestly favorable for online sports betting operators. Nor, he added, was DraftKings anywhere near alone in its November woes.
Fourth-quarter revenues should still be massive: almost $1.2 billion. Cash flow looks to be $147 million, according to Greff, rather than his anticipated $201 million.
Also, DraftKings appeared to have lost some market share, “which we would chalk up to ESPN Bet’s aggressive promotional investment around its November 14 launch, and generic industry market share volatility.”
However, Greff stood by his 2024 profitability projections for DraftKings, and by his financial outlook for the company in 2025 and 2026. He also kept an “Overweight” rating on the stock, which was trading for $33.66 a share at the time of his report.
Greff liked DraftKings’ “continued execution in an appealing sector, with attractive same-store and new market growth prospects, and an ability to leverage its scale to realize operating expense rationalization.
The analyst believed that DraftKings was strongly fortified in terms of brand, product and scale of operations, to the point where it could stand off new entrants like ESPN Bet. He noted DraftKings’ ability to successfully compete in the past with Caesars Sportsbook.
