SHUTTERSTOCK/VECTORPIXELSTAR DraftKings stock dropped nearly 22% on Friday, after the company’s Q4 2021 earnings call. Investors weren’t happy that the company’s leadership intends to continue spending heavily on marketing and promotion while the business has yet to achieve profitability.
Chatter began immediately on social media about which online gambling operator will replace DraftKings at the top of the heap.
As is often the case, there has been a partial rebound since the drop. Markets were closed on Monday, but DraftKings rose nearly 8% in Tuesday trading, and has made smaller gains today.
Online Poker Report has often referred to DraftKings as a member of the Big Three. By this, we’re placing it alongside US online casino market leader BetMGM and America’s online sportsbook heavyweight FanDuel. With DraftKings now trading at less than one-third of its March 2021 high, there’s a temptation to remove it from that elite group. However, that would be premature.
Other than BetMGM, which started its marketing and promo race with competitors at a significant brand recognition advantage, most viable competitors are spending at a rate almost as high as DraftKings. Somewhat smaller competitors, like Rush Street Interactive (RSI) of BetRivers fame, may spend more rationally and were favored by social media commenters. However, almost no US iGaming stocks have been untouched by recent corrections, as investors have been spooked across the board.
Meanwhile during last month’s investor update filled with similar questions from analysts, even BetMGM didn’t promise to become profitable until 2023 . It’s still the ’80s up in DraftKings
Sure, Jason Robins – DraftKings’ co-founder, CEO and board chairman – sounded a bit like actor Michael J. Fox ‘s character in the 1987 hit movie, The Secret of My Success . Protagonist Brantley Foster embodied the ’80s zen with: “We gotta expand!”
On Friday, Robins said DraftKings is spending a lot, but pointed out that it has also doubled in size.
The 2021 annual report shows revenue more than doubled vs. 2020. DraftKings’ sales and marketing expenditures nearly doubled, as well.In 2021, DraftKings’ revenue of nearly $1.3 billion exceeded its sales and marketing expenditures by $314.5 million , according […]
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