On Friday, November 4th, 2022, DraftKings, a daily fantasy sports (subset of fantasy sport games) contest provider and sports betting company, announced slower monthly user growth in the third quarter of the year that fell short of expected which caused the value of the shares to be very low, with 28% prior to the announcement.
Weak customer growth:
DraftKings is currently facing one of the biggest problems in the iGaming industry, weak monthly customer growth. Unfortunately, the company wasn’t prepared for that because it raised its revenue guidance for 2022 to a range of 2.16 billion dollars to 2.19 billion dollars, after revenue for the previous quarter of between 2.08 billion dollars to 2.18 billion dollars, appeared to be above Wall Street expectations, aka company’s loss wasn’t as bad as predicted.
Previous quarter ended September 30th, 2022 and during that quarter DraftKings hoped launch of its online sports book products, that will be live with mobile sports betting across 18 states including Maryland, Puerto Rico, Ohio and Massachusetts after getting its license and regulatory approvals, will help to drive players commitment and their desire to win (analysts projected that at least 37% of the U.S. population will be interested in this products). However, that didn’t go as planned because even though the number of the paying customers increased to 1.6 million, which was about 22% more than 1.3 million customers from year ago, it still wasn’t enough to cover 2 million that analysts projected, according to StreetAccount. Also, it was worse than in the previous two quarters!
For this quarter, DraftKings announced a net loss of about 450 million dollars or 1 dollar per stock, while analysts predicted a net loss of 1,04 dollars per stock. At the same time last year, the company announced a net loss of 545 million dollars and revenue up to 502 million dollars (a lot higher than the 437 million dollars that Wall Streets predicted), which signifies the company’s progress with each year.
Jason Robins, DraftKing’s Chief Executive Officer and Co-Founder, said: “Our team continued to drive top-line growth through highly effective customer engagement and compelling product and technology enhancements while remaining focused on our path to profitability.”
Contest can be accessed relatively easy, because players can play from their desktop or laptop right in the browser or after downloading fast, free and secure apps for their phone. Also, after signing up, players can win millions of dollars worth of prizes.