DraftKings quarterly loss comes in wider than Wall Street expectations
- DraftKings quarterly loss comes in wider than Wall Street expectations.
- IRS makes DraftKings liable to pay federal excise tax on its entry fees.
- DraftKings says its long-term plans are unlikely to be disrupted by COVID-19.
DraftKings Inc. (NASDAQ: DKNG) published its quarterly financial results on Friday that highlighted a higher loss in the fiscal second quarter than what analysts had anticipated. The company, however, topped Wall Street expectations for quarterly sales.
According to a recent Bloomberg report, the Internal Revenue Service (IRS) has made fantasy sports companies liable to pay federal excise tax on their entry fees. The news wasn’t well-received by DraftKings investors.
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Shares of the company plummeted 10% in premarket trading on Friday and lost another 2% on market open. At £25.45 per share, DraftKings is roughly 225% up year to date in the stock market after dropping from an even higher £33.34 per share in the first week of June. Learn more about how to choose winning stocks.
DraftKings’ Q2 financial results versus analysts’ estimates
DraftKings reported £123.14 million of loss in the second quarter that translates to 41.96 pence per share. In the same quarter last year, its loss was capped at a much lower £21.44 million or 11.44 pence a share.
In the quarter that concluded on 30th June, the sports betting provider registered £54.09 million of revenue versus a much lower £43.79 million in the comparable quarter of 2019.
According to FactSet, experts had forecast the company to print a lower £50.66 million in revenue in the recent quarter. In terms of loss per share in Q2, they had estimated 15.26 pence.
The Boston-based company boasted to have concluded the fiscal second quarter with over £920 million of cash. DraftKings also highlighted that signs of recovery were evident in recent weeks as sports events resumed. Betting on its platform, it added, was slowly recovering. As per the company:
“The positive momentum has accelerated with the return of MLB, the NBA, WNBA, the NHL, and MLS.”
DraftKings’ forecast for the full fiscal 2020
For the full year, DraftKings now forecasts its pro forma revenue to lie in the range of £381.47 million to £411.99 million that represents a 22% growth to a 37% growth on a year over year basis.
It also expressed confidence that none of its long-term plans are expected to be disrupted due to the Coronavirus pandemic that has so far infected more than 5 million people in the United States and caused over 170 thousand deaths.
At the time of writing, DraftKings Inc. is valued at £8.95 billion and has a price to earnings ratio of 608.78.