Most companies have experienced some impact from macro factors on their growth trajectories over the past year. However, DraftKings, the leading sportsbook and online gambling company in the U.S., has remained focused and continued to expand its operations. In the last 12 months, DraftKings’ shares have rallied over 150%, and the company has started to show its potential for profitability. It has slowed down its pace of operating expenses growth and aims to achieve adjusted EBITDA profitability in 2024. Despite the stock’s higher price, there is still significant upside potential for DraftKings this year.
One of the key factors supporting DraftKings’ growth is the open market that still exists for sports betting and online gambling in the U.S. Currently, DraftKings’ sports betting is available in only about half of the U.S. population, with major states like California and Texas yet to legalize it. Additionally, iGaming is only live in five states, leaving a vast untapped market. DraftKings’ existing user base also continues to grow, and the company offers a variety of sports and formats to cater to different preferences.
DraftKings has provided preliminary guidance for fiscal year 2024, indicating a 26% year-over-year revenue growth. This projection is based on fewer state legislations driving revenue growth compared to previous years. The company’s mature markets, such as New Jersey, continue to demonstrate growth potential, with ongoing engagement from users. DraftKings serves a $20 billion total addressable market currently, and it expects this to grow by 50% within five years.
Profitability is also a focus for DraftKings, with the company expecting its first full year of adjusted EBITDA profitability in fiscal year 2024. As older markets mature, DraftKings spends less on customer acquisition and benefits from more frequent usage. There is also the possibility of further territory expansion, as indicated by the map of sportsbook legislation.
DraftKings has shown progress in capturing market share and building its user base. It currently holds 33% of the combined U.S. market for online sportsbooks and iGaming, gaining share from competitors like FanDuel. In Q3, DraftKings added 0.4 million net-new unique users, demonstrating faster growth compared to the previous quarter.
Overall, DraftKings has significant potential for growth and profitability in the year ahead and in the long term. Investors should continue to ride the upward trend of this stock.
Source link
