DraftKings Stock Surges After Positive Guidance from Investor Day

DraftKings Stock Soars After Bullish Investor Day

Shares of DraftKings (NASDAQ: DKNG) surged 4.13% on Tuesday, reaching a new 52-week high after the company presented bullish forecasts at its investor day. The stock rally was accompanied by nearly double the daily average trading volume.

The gaming company raised its 2023 earnings before interest, taxes, depreciation, and amortization (EBITDA) and revenue estimates earlier this month while unveiling strong 2024 forecasts. The out-year forecasts provided at the investor day appeared to delight analysts and investors.

For 2025, DraftKings expects revenue in the mid-$5 billion range and adjusted EBITDA of $900 million. Those figures are projected to grow to $6.2 billion and $1.4 billion, respectively, the following year. By 2028, the company anticipates sales of $7.1 billion on EBITDA of $2.1 billion.

DraftKings CEO Jason Robins emphasized the company’s commitment to maintaining its current pace of product innovation, stating, “We believe that our velocity and pace of product innovation will continue to be faster than any other operator in the U.S. online gaming space.”

Sell-side analysts echoed this sentiment, with Piper Sandler expressing its impression of the company’s estimates and reiterating an “overweight” rating with a $40 price target on the stock. Similarly, Craig-Hallum maintained its “buy” grade on the stock while increasing its price estimate to $45 from $40.

DraftKings emphasized its strong growth outlook, citing its position as the leading operator in terms of iGaming and online sports betting gross revenue share in the US. The company forecasts a total addressable market of $30 billion by 2028, up from $20 billion today, based solely on the states in which it currently operates.

Furthermore, DraftKings anticipates being live in 25 states and Puerto Rico with iGaming available in five of those jurisdictions by 2024. Robins also expects more U.S. states to legalize online sports betting and iGaming, potentially adding significant revenue growth and long-term adjusted EBITDA.

In terms of product evolution, DraftKings is set to introduce progressive parlays, allowing bettors to receive compensation even if one or more legs of the wager lose.

The company’s positive outlook and plans for expansion and innovation have sparked optimism among investors and analysts, leading to the stock’s strong performance.