Why DraftKings Stock Jumped Today

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What happened

Shares of DraftKings (DKNG 9.78%) jumped 9.8% on Friday after the daily leader in fantasy sports and online gambling released its second-quarter results before market open and raised its 2022 financial guidance.

So what

DraftKings revenue jumped 57% year-over-year to $466 million in the second quarter. The company’s entry into the online sports betting and casino markets of Ontario, Canada in May has helped bolster its growth. The recent acquisition of Golden Nugget Online Gaming also contributed to the gains.

People continue to gravitate to DraftKings gaming platforms despite the challenges posed by inflation and other economic headwinds. Its monthly average of paying business-to-retail customers jumped 30% to 1.5 million. These customers also placed more bets, resulting in a 30% increase in average revenue per payer to $103.

“Customer engagement remains strong and we continue to see no discernible impact from broader macroeconomic pressures,” CEO Jason Robins said in a press release.

Even better, DraftKings losses are coming down. It generated a net loss of $217 million, or $0.50 per share, compared to a loss of $305 million, or $0.76 per share, in the year-ago quarter. It was much better than Wall Street expected. Analysts had expected a loss of $0.75 per share.

Now what

Management also strengthened its full-year guidance, raising the midpoint of its revenue guidance from $2.115 billion to $2.130 billion. This would equate to an annual growth of 64%. It also improved its estimate of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) by $60 million to a loss of about $800 million.

“With our continued investments in core online gaming technologies, we are in a competitively strong position heading into the start of the NFL season,” Robins said. “We remain well capitalized, ready to enter new markets as they become active, and confident in our ability to compete and win with our customers.”

Joe Tenebruso has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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