The sports betting firm has improved its long-term financial projections after publishing strong 2020 results and due to heightened demand in online sports betting.
EBITDA Expectations Up to $1.7 billion
DraftKings has increased its long-term earnings before interest, tax, depreciation, and amortization (EBITDA) expectations from $1 billion to $1.7 billion. The forecast comes after the company posted strong iGaming results in 2020.
DraftKings released the forecast as part of their virtual Investor Day on Tuesday.
The operator posted an annual revenue increase of 49% at the end of December 2020 compared to 2019. Year over year, Q4 revenue was up by 146.1% to $322.2 million. The growth of its customer base and the increased interest in daily fantasy and sports wagering benefitted the operator’s figures for the last quarter of 2020.
The target date for reaching this level of earnings is unspecified. However, the company said the main factors for this are 65% of the US having access to legal online betting in their home state. Also, 30% have access to legal iGaming and 64% of Canada have access to legal betting and iGaming.
At Least 20% Market Share if Online Betting Becomes Fully Legal
If online sports betting becomes legal nationwide, it would amount to $22 billion, according to DraftKings. In this case, the operator would hold a 20% market share for US online sports betting for $2.9 billion in revenue.
Online sports betting is currently available in 15 states or 27% of the population. DraftKings is live in 12, which corresponds to 25% of the population.
The sports betting firm also improved its projections about its market share if US iGaming became fully legal. In this case, DraftKings would hold a 15% market share out of the $40 billion in total. Previously, projections pointed to a 10% share. Management supported its view with the increase in the total addressable market for legalized online sports betting and online casino games in North America.
“We come away from DKNG’s investor day impressed with the company’s ability to acquire and maintain customers through its product/technology, and believe the company is well positioned to drive improving unit economics over time.”Daniel Politzer, Analyst at JPMorgan
Long-term net revenue estimate is up from $3.7 billion to $5.4 billion. Following the announcement on Tuesday, shares went up 2.8% to $62.20.
DraftKings’ April merger with a special-purpose acquisition firm has boosted the company’s share by 254.8% up to date. Another beneficial factor is the heightened interest in online sports betting during the pandemic.