DraftKings: Keep Your Eyes On The Profitability Prize

YR Research
4.21K Followers
(7min)

Summary

  • DraftKings is nearing profitability, potentially as soon as 2025, driven by improving margins and disciplined cost management.
  • Despite a slightly disappointing Q1, DraftKings is gaining market share and benefiting from the ongoing legalization of online betting.
  • The company’s premium valuation is justified by its strong US exposure, high growth outlook, and steady progress toward free cash flow.
  • While risky, I reiterate a 'Buy' rating, expecting shares to perform well as DraftKings advances toward profitability and further market share gains.

Money down the drain

J Studios

Riding the secular tailwind of online betting legalization, DraftKings Inc. (NASDAQ:DKNG) has been a popular growth stock, going public during the SPAC frenzy in 2021.

Just like many of the companies that went public back then, DraftKings is

This article was written by

4.21K Followers
I aim to invest in companies with perfect qualitative attributes, buy them at an attractive price based on fundamentals, and hold them forever. I hope to publish articles covering such companies approximately 3 times per week, with extensive quarterly follow-ups and constant updates.I manage a concentrated portfolio targeted at avoiding losers and maximizing exposure to big winners. This means that often I'll rate great companies at a 'Hold' because their growth opportunity is below my threshold, or their downside risk is too high.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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