draftkings Falls 21.6% After Earnings!

But, Members of “Weekly Options USA” Are Up 259% Using A Weekly Put Option!

Sunday, February 20, 2022

Draftkings Inc shares dropped 21.6% after reporting earnings on Friday, after the fantasy sports and online betting company warned of larger losses in the coming year.

But, “Weekly Options USA” Members were up 259% after earnings using a weekly put option!

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Draftkings Inc (NASDAQ: DKNG) shares slumped lower Friday after posting stronger-than-expected fourth quarter earnings but forecast a much wider loss over the coming year for the online sports betting and gaming group.

Draftkings Inc shares fell after cautioning that the company would generate adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $825 million to $925 million in 2022, in part because of the expenses related to entering new markets in New York and Louisiana. Analysts had expected an adjusted EBITDA loss of only $573 million. 

“In the present environment where tech investors have displayed zero tolerance for large losses, the 2022 Ebitda guidance is going to be a disappointment,” Vital Knowledge analyst Adam Crisafulli said.

Also, adding to DraftKings Inc shares falling their most in almost two years as they announced that the company added fewer new customers in the fourth quarter.

DraftKings Inc said Friday that an average of 2 million monthly unique paying customers engaged with the company during the fourth quarter. Analysts were looking for 2.1 million monthly payers.

DraftKings Inc said revenues for the three months ending in December rose 47% from last year to $473 million as more states eased restrictions on online gaming. Marketing and expansion costs, however, ate into the group's bottom line, which came in at $128 million.

Sports betting has spread to an increasing number of U.S. states since the Supreme Court struck down a federal ban in 2018. That’s led to a free-for-all of introductory offers as DraftKings, FanDuel and others try to persuade people to use their phone to place wagers for the first time. DraftKings has entered the New York and Louisiana markets, and said Friday there are new potential opportunities in Maryland, Puerto Rico and Ohio.

Building relationships with new customers -- and sports leagues -- costs money. DraftKings spent nearly $1 billion on sales and marketing last year, almost double its allocation in 2020.

DraftKings is far from profitable. It generated a net loss of $326 million in the fourth quarter alone. Its adjusted loss per share of $0.35, however, was better than the $0.81 per-share loss Wall Street had expected.

Read the article.... .“ Draftkings Inc Earnings Expectations!”

Summary.....

Unfortunately, DraftKings' report didn't live up to the higher expectations of its shareholders, and that motivated the sharp decline in the stock price. That's been an ongoing theme this earnings season, and it could cause further negative sentiment about other high-growth stocks that have yet to release their latest results.

The stock had already fallen 63% over the past year through Thursday’s close.

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