DraftKings Opens Up on Investor Day, Stock Still Getting Hammered
Rich Graessle/Icon Sportswire via Getty Images. Pictured: Citizens Bank Park.
In an effort to deeper explain its business, which has been weighed down by Wall Street doubters, DraftKings had its investor day on Thursday.
The response? Shares were crushed to nearly all-time lows, down 8.6 percent to $21.19 in the first two and a half hours of the trading day. The stock closed down 9.83 percent to $20.91. The stock is down nearly 66.2 percent over the last year.
In its presentation on Thursday, DraftKings said the overall sports betting and iGaming business is bigger than they thought it was, with a total addressable North American market at maturity of $80 billion, up from $68 billion.
Sports betting is currently legal in states that make up 44 percent of the population, and DraftKings currently has a 25 percent share, second only to FanDuel and ahead of BetMGM. DraftKings estimates the top three own an 80 percent share of the online betting market.
The company reiterated that five states are contribution positive (New Jersey, West Virginia, Indiana, Illinois and New Hampshire). DraftKings also noted that three-year timelines from legalization to being contribution positive were realistic in all new states. However, contribution positive does not include marketing dollars devoted to acquire such customers, the true pain point with investors.
DraftKings also hit home the point of differentiation that its competitors don’t have. The company said it has 115,000 people buy into the 110 NFT drops it offered in a five-month period of time, all of which sold out. DK said that it found that 40 percent of its customers bought crypto or NFTs in the last year, and DraftKings followers are 6.6 times more likely to tweet about NFTs.
Given that this sector has many similarities to betting, it’s not surprising, but the question is whether DK can develop a serious marketplace business, or if it’s just a distraction. The early response seems to suggest it’s the former, but this also happened in a bullish market.