DraftKings Lifts 2021 Outlook After 4Q Sales Jump 146%; Shares Gain 6.4%

Shares of DraftKings rose 6.4% on Feb. 26 as the online sports betting and gaming company’s fourth-quarter results came in better than analysts’ estimates.

The company’s revenues shot up by 146% year-on-year to $322 million beating consensus estimates of $232.6 million. Accounting for the pro-forma impact to the combination with SBTech (Global) Ltd. and Diamond Eagle Acquisition Corp. completed April 23, 2020, as if it had occurred Jan. 1, 2019, revenue grew 98% for the quarter, DraftKings said.

Adjusted loss per share came in at $0.24 in 4Q, smaller than analysts’ estimates of a loss per share of $0.43.

DraftKings’ (DKNG) co-founder and CEO Jason Robins said, “In the fourth quarter of 2020, we saw MUPs [monthly unique payers] increase 44% to 1.5 million and ARPMUP [average revenue per monthly unique payer] increase 55% to $65.”

“We are raising our revenue outlook for 2021 due to our expectation for continued growth, the outperformance of our core business and newly launched states that were not included in our previous guidance,” Robins added.

DKNG’s MUPs for its business-to-consumer (B2C) segment rose 44% year-on-year reflecting strong payer retention and acquisition trend across its platforms. (See DraftKings stock analysis on TipRanks)

The company raised its FY21 revenue guidance from a range of $750 million to $850 million to a range of $900 million to $1 billion, indicating year-on-year growth of between 40% to 55%. The revenue guidance is driven by the launch of online legal sports betting in the states of Michigan and Virginia and assumes that all professional and college sports events will take place as announced.

Following the earnings results, Rosenblatt Securities analyst Bernie McTernan reiterated a Buy and a price target of $65 on the stock.

“DKNG increased their guidance for ’21E to $900M-$1B from $750M-$850M, a 19% increase at the midpoint driven by strong results in 4Q and launches in MI and VA. VisibleAlpha consensus is $882M for ’21E and the midpoint represents 8% upside,” McTernan wrote in a note to investors.

The rest of the Street is cautiously optimistic on the stock with a Moderate Buy consensus rating based on 10 Buys, 4 Holds, and 1 Sell. The average analyst price target of $65.33 implies 6.2% upside potential to current levels.

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