Investors hammered DraftKings stock following the third-quarter earnings report from the sportsbook operator early Friday.
The report had some positives as DraftKings Sportsbook outperformed in terms of revenue and cut its quarterly adjusted EBITDA loss by 15.7% to $264.2 million. The company also raised its revenue and adjusted EBITDA goals for this year and introduced 2023 guidance suggesting about a 33% improvement at the midpoint.
Investors clearly wanted more, though. The past week has included both Caesars and PENN Entertainment boasting sports betting and iGaming profitability in October 2022 with a potential to turn a profit for the fourth quarter.
DraftKings, however, did not join that profitability parade. The company maintained its expectations that profitability will first come in the fourth quarter of 2023 with the potential for a break-even full year in 2024.
DraftKings stock falling on high volume
DKNG was down more than 17% when the earnings call started at 8:30 am Eastern, eventually opening down 15.4% at $13.25.
The stock is still tumbling as of this writing, hitting $12.00 at its lowest so far.
DKNG’s volume was up more than a third compared to its 30-day average by 10:30 am.
New DKNG guidance for this year and next
DraftKings raised its 2022 revenue guidance midpoint by $45 million to $2.175 billion while adjusted EBITDA loss improved $10 million to $790 million.
The higher revenue came from a better mix of high-margin parlays following the addition of new products in time for NFL betting. Parlays as a percentage of handle grew 5 percentage points to 28% compared to last year.
Adjusted EBITDA expectations improved despite the addition of launch costs for Kansas and Maryland, as well as pre-launch costs for Ohio now included in the full-year guidance.
DraftKings is guiding to midpoints of $2.9 billion in revenue and $525 million in adjusted EBITDA loss for full year 2023.
