DraftKings operates as a digital sports entertainment and gaming company providing its users daily sports betting, fantasy sports and “stay-at-home” iGaming opportunities.
For H1 June 2020, the Company reported revenues of US$ 159.4 MM as compared with US$ 125.4 MM in the corresponding period last year reflecting a YoY growth of 27.1%. Adjusting the revenue figures to carve out the impact of recent business combinations, the YoY revenue growth comes at an impressive 15.1%. The Company’s profitability performance remains a challenge as it recorded a net loss of US$ 230.1 MM in HI June 2020 (H1 June 2019: Net Loss of US$ 57.6 MM). Apart from the one-off items of circa US$ 75.5 MM , the profitability was impacted by high advertisement expenses and the shift of products away from high margin sports betting and fantasy sports platforms due to sporting event hiatus owing to covid-19 lockdowns in US and world over. However the Company’s balance sheet strength lies in its US$ 1.24 Bn cash balance that represents 49% of their asset base and there is no debt on its balance sheet as of June 2020.
Other fundamental factors supporting the stock include the growing legal sports betting market in US which grew circa 18.9% YoY from January to July 2020 , an increasing trends towards legalization of sports betting by US states hurt by declining revenues owing to the onslaught of covid-19 and a rising trend towards stay at home entertainment.