{"id":1978,"date":"2021-05-10T09:27:01","date_gmt":"2021-05-10T16:27:01","guid":{"rendered":"https:\/\/wagers.com\/staging\/4285\/?p=1978"},"modified":"2021-11-09T09:30:53","modified_gmt":"2021-11-09T17:30:53","slug":"street-hits-like-on-dks-social-plans","status":"publish","type":"post","link":"https:\/\/wagers.com\/staging\/4285\/news\/street-hits-like-on-dks-social-plans\/","title":{"rendered":"Street hits like on DK\u2019s social plans"},"content":{"rendered":"

DraftKings<\/h3>\n

Analysts: <\/strong>Deutsche Bank, Macquarie, Credit Suisse, Truist Securities, Jefferies<\/p>\n

Extending losses: <\/strong>Deutsche Bank (hold) suggested the marginally worse than expected EBITDA losses performance in Q1 has led expectations for losses for the year to \u201cmigrate lower\u201d – they are now projecting losses of $551m versus prior estimates of $460m. The revenue beat was due to an unspecified benefit from a high hold percentage. This is unlikely to last. DB noted that intense competition, via tight pricing, \u201ccould put pressure on hold percentages, in addition to the normal volatility of the business, which tends to normalize over time.\u201d Truist (hold) noted that rising sales and marketing costs would continue to grow with Q3 EBITDA losses likely to be the \u201cdeepest\u201d.<\/p>\n

I used to be a King:<\/strong> Recent commentary from BetMGM<\/a> suggested it believes it\u2019s vying for second place behind FanDuel and the team at Macquarie (outperform) indeed estimate DraftKings has lost market share. But Macquarie\u2019s analysts went on to say that earnings call announcements on media, technology improvements and the new social functionality represent a successful effort to \u201cfortify (DraftKings\u2019) mousetrap.\u201d Meanwhile, Credit Suisse (outperform) suggested the social innovations would provide good \u201cdifferentiation.\u201d\u00a0Ahead of the earnings call, Jefferies (buy) said the company had provided \u201cstrategic substantiveness.\u201d<\/p>\n

\u201cOur take from the quarter is that DKNG remains on track to grow as a first-mover from multiple perspectives: technological integration, product breadth and ultimately revenue.\u201d<\/em><\/p><\/blockquote>\n

However, the market\u2019s post-call reaction was less enthusiastic, sending the shares down over 6.5% on a generally bad day for gaming stocks.<\/p>\n

Walk on the wild side:<\/strong> DB noted that management said little about its chances of finding a licensed berth in either New York or Florida after what the analysts term a \u201clargely disappointing\u201d quarter on the regulatory front. As the DB team says, while DraftKings will certainly attempt to qualify as a platform provider in NY – and then utilising one of the two available skins – from there \u201cthe process gets more confusing and ambiguous.\u201d Credit Suisse believes DraftKings is the front runner in NY. \u201cWe think it makes sense for DKNG to partner with one of the other leaders in the space to make the bid\/proposal more attractive and then allocate themselves the two licenses.\u201d<\/p>\n

Come on feel the Illinois:<\/strong> DB noted that Illinois was\u00a0a tailwind in Q1 due to the unexpected benefit of having mobile registration available for the whole of the three months. As is detailed below (see Illinois March data), with in-person registration back in force as of early April, it potentially puts DraftKings at a disadvantage given the geography of its partner casino in East St Louis. However, DB said that given management’s comments on having built up a sizeable player base while in-person was suspended, it shouldn\u2019t have a dramatic near-term impact on market share.<\/p>\n

In other news on Earnings + More today:<\/h3>\n