DraftKings (NASDAQ:DKNG) stock traded at around $50 for months before tumbling after its earnings report. Speculators thought that the start of the NHL season would spur sports betting volumes. The firm posted growth in the quarter, with key metrics up.
Markets wanted more.
DraftKings posted revenue growing by 60.2% Y/Y to $213 million. The average revenue per MUP (monthly unique players) grew to $47, up by 38%. For 2021, the company raised its revenue guidance to $1.26 billion. Next year, revenue will be $1.7 billion to $1.9 billion, up by 43% Y/Y.
Markets are cautious on the upside case for DKNG stock. At over 30 times sales, DraftKings does not have a sizable moat. The company wants to spend billions in acquisitions to sustain growth. This would penalize investors for the sake of growing the business.
Customers may grow tired of gambling. Still, this risk is minimal. People who go to Las Vegas or Macao are habitual. Those who like to bet on sports will continue. So long as they pick DraftKings first, its over 40% growth rate is sustainable.
The firm has plans to take grow globally. It will also expand product offerings, raising its market share in the U.S.
DKNG stock is approaching a low. This is a stock to watch.
