DraftKings Q3 Results, Guidance Cut Weigh Down On Stock: Retail Turns Cautious Despite Betting On Long-term Fundamentals

DraftKings, Inc. ($DKNG) reported a huge miss on the bottom line for the third quarter and slashed its 2024 forecast, sending shares of the sports-betting company sharply lower in Thursday’s after-hours session.

Boston, Massachusetts-based DraftKings reported a loss of $0.60 per share for the quarter, slightly narrower than the year-ago loss of $0.61 per share. It however missed the $0.41-per-share loss forecast by analysts.

Revenue climbed 38.68% year-over-year (YoY) to $1.10 billion, shy of the consensus estimate of $1.11 billion. 

DraftKings said customer acquisition retention and engagement were strong during the quarter, with online sportsbook handle and gross gaming revenue rising 25% and 39%, respectively. iGaming revenue increased 26%, it said.

The adjusted gross margin rose 300 basis points YoY to 40%, exceeding the company’s expectations.

Citing the impact of customer-friendly sport outcomes early in the fourth quarter and its impact on adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), DraftKings lowered its 2024 revenue guidance from $5.05 billion-$5.25 billion to $4.85 billion-$4.95 billion, while the consensus models revenue of $5.13 billion.

The company also cut its adjusted EBITDA guidance from $340 million-$420 million to $240 million-$280 million.

For 2025, the company introduced revenue guidance of $6.2 billion-$6.6 billion, equating to growth of 27%-35% and surrounding the consensus of $6.27 billion, according to Yahoo Finance. It continues to expect adjusted EBITDA of $900 million-$1 billion.

In after-hours trading, the stock shed 5.87% to $36.69.

Retail sentiment soured, with some users on Stocktwits unhappy over the loss-making streak.

Another called the results a clear miss but said they bought the dip, believing in long-term fundamentals.

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