DraftKings (DKNG – Free Report) is expected to release fourth quarter 2021 results on February 18.
Zacks’ consensus estimate for revenue is pegged at $439.5 million, indicating a 36.40% increase over year-ago quarter levels.
The earnings estimate is set at breakeven against a loss of 82 cents per share over the past 30 days.
Let’s see how things evolved before this announcement.
Factors to consider
DraftKings’ second quarter performance should reflect strong sports betting demand in the quarter ahead.
Strong demand for online gambling on platforms such as online poker, casino games and lottery likely contributed to the company’s performance in the fourth quarter.
The global market is witnessing a push to legalize online sports betting. In the upcoming quarter, DraftKings entered into several deals in an effort to tap into the online sports betting market and win over sports fanatics as potential customers. During the period, mobile betting was launched in several states, helping DraftKings gain an average of 1.3 million unique paying customers per month.
The resurgence of sporting events and the return of major sports leagues are expected to lead to an increase in demand for mobile sports betting. Growing demand for online gambling on platforms such as online poker, casino games and lottery likely fueled revenue.
In the fourth quarter, the Mashantucket Pequot Tribal Nation, Foxwoods Resort Casino and DraftKings launched online and mobile sports betting and an online casino in Connecticut. That should have given Connecticut sports fans a boost.
DraftKings, the New Hampshire Lottery and Filotimo Casino & Restaurant have also partnered to expand their retail sports betting in New Hampshire, opening a partner retail sports betting facility in Dover. This should have helped Sportsbook’s adoption rate.
Currently, DraftKings is live with mobile sports betting in 15 states that collectively represent 29% of the US population. Additionally, it is live with iGaming in five states, representing approximately 11% of the US population.
During the third quarter, DraftKings expanded mobile and online sports betting to three additional US states (Wyoming, Arizona and Connecticut). This should have benefited the company’s expansion plans in the quarter ahead.
In Q3 2021, the company’s monthly unique payers for the B2C segment increased 31.24% year-over-year. On average, 1.3 million monthly unique paying customers are engaged with DraftKings in each month of Q3. The benefit reflects strong single-payer retention and acquisition across Sportsbook and iGaming product offerings in new states. These positive elements should continue in the fourth quarter.
Apart from that, the company’s extensive content portfolio, thanks to partnerships with major sports teams such as Major League Baseball, Chicago Cubs, New York Giants, Colorado Rockies, Philadelphia Eagles and Nashville Predators , should have helped customers win in the third quarter. .
Main developments in the fourth quarter
On December 7, DraftKings recently partnered with the National Football League Players Association (NFLPA) and One Team Partners, revealing plans to launch gamified NFT (non-fungible token) collections. The NFT Collection will debut on DraftKings Marketplace during the 2022-23 NFL season.
On November 17, DraftKings entered into a new agreement with FaZe Clan, becoming the official partner for sports betting, daily fantasy, iGaming and free-to-play. Under the deal, DraftKings will appear in FaZe’s digital content ecosystem, increasing the former’s presence in esports.
On November 4, the National Basketball Association (NBA) announced the expansion of its multi-year relationship with DraftKings, making it a co-official sports betting partner in the league. The agreement allows DraftKings to integrate the NBA’s expanded rights and assets into its sports betting, daily fantasy sports, iGaming and free-to-play products and promotional offerings.
On October 14, DraftKings entered into an agreement with the National Hockey League (NHL) to become the Official Sportsbook Partner, Daily Fantasy Sports and iGaming in the United States. Complimenting the deal, DraftKings entered into a strategic alliance with Turner Sports, including Bleacher Report to be the exclusive daily sportsbook and fantasy sports provider for their NHL coverage.
On October 18, Polygon, an Ethereum-based scaling platform integrating millions of people into Web 3.0, announced a blockchain collaboration with DraftKings Marketplace – a digital collectibles ecosystem built by DraftKings for a mainstream accessibility to support custom NFT drops as well as secondary market trading.
What our model says
According to the Zacks model, the combination of a positive earnings ESP and a Zacks rank of #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of a higher gain. But it is not the case here.
DraftKings has an earnings ESP of -6.71% and currently carries a Zacks rank of #3. You can discover the best stocks to buy or sell before they are flagged with our earnings ESP filter.
Actions to consider
Here are a few companies you might want to consider, as our model shows they also have the right combination of elements to show a pace of earnings in their next releases:
Cedar Fair (FUN – Free Report) has a +6.02% Earnings ESP and a #1 Zacks Rank. The company is set to announce its fourth quarter 2021 results on February 16.
FUN is up 41.3% over the past year, against a 4.2% decline in the Zacks Hobby & Recreational Services industry and a 23.1% drop in the Consumer Discretionary sector. You can see the full list of today’s Zacks #1 Rank stocks here.
PlayAGS (AGS – Free Report) has an ESP on Earnings of 5.66% and a Zacks Rank #2. The company is expected to announce its fourth quarter 2021 results on March 10.
The AGS is up 15.2% over the past year against the 10.7% decline in the gaming industry Zacks and the 23.1% drop in the consumer discretionary sector over the past year.
Gildan Sportswear (GIL – Free Report) has a +9.57% Earnings ESP and a Zacks Rank #2. The company is expected to announce its fourth quarter 2021 results on February 23.
The GIL is up 42.7% over the past year against the 10.7% drop in the Zacks Textile – Apparel industry and the 23.1% drop in the Consumer Discretionary sector.
Stay on top of upcoming earnings announcements with Zacks Earnings Calendar.