Boston-based sports-betting giant DraftKings’ top leader said this week that he and his colleagues aim to make investors rue selling off company shares.
As MarketWatch first reported, DraftKings CEO Jason Robins tweeted Tuesday, “If you sold #DKNG today, just be aware that my team and I are on a mission to make you regret that decision more than any other decision you’ve ever made in your life.”
As of Thursday afternoon, the tweet had drawn more than 2,300 likes, was retweeted 588 times, and was commented on 863 times.
DraftKings shares closed at $17.58 Thursday, down 20 cents, or 1.2 percent, from a day earlier and near a $16.56 52-week low. (The shares rebounded after hours, rising 5 cents, or 0.28, to settle at $17.63.)
The stock price has dropped more than 42% in three months and 75% in 12 months. As Seeking Alpha reported, Argus on Monday downgraded DraftKings to “hold” from “buy” on growth-pace concerns and Wells Fargo on Feb. 22 dropped DraftKings to “equal-weight” from “overweight.”
The Motley Fool reported last month that DraftKings officials said during a March 3 investor day that they expect the company to have $2.1 billion in annual adjusted earnings before interest, taxes, depreciation, and amortization when the business reaches its full potential. (AEBITDA is a cash-flow measure excluding one-time costs.) The company hasn’t, however, forecast when this “full potential” will come.
During last month’s fourth-quarter earnings call, DraftKings said it expected adjusted EBITDA of $825 million to $925 million for 2022, wider than its 2021 adjusted EBITDA loss of $676.1 million and its 2020 adjusted AEBITDA loss of $391.9 million in 2020.
Near-term developments give DraftKings reasons for optimism. The NCAA basketball tournaments are coming (the company said it will deliver sports betting coverage during Sunday’s brackets reveal). And sources told ESPN on Thursday that Major League Baseball players and owners have reached a tentative deal to end the more-than-three-month lockout and enable a full 162-game season. Robins had told CNN Business the lockout, which started Dec. 2, could be problematic if delayed or shortened the season.
Nevertheless, MoffettNathanson’s Robert Fishman has told The New York Times DraftKings won’t have a positive cash flow until 2025 and won’t turn a profit until 2028.
Follow Matthew Crowley on Twitter @copyjockey
