DraftKings shares sink to below price achieved following 2020 float
Bloodbath continues for operator’s investors as stock crashes to under $18 after sliding from high of $72 in March 2021
Shares in DraftKings were down 11% at $17.55 (£13.05) in early trading on Monday 24 January as the sell-off in the Nasdaq-listed US online operator shows little sign of subsiding.
It means the Boston-headquartered company’s stock is now below the $19.35 close on its first day of trading on the Nasdaq in April 2020 following its three-way merger with a SPAC and supplier SBTech.
Its shares have tumbled 73% since hitting an all-time high of $72 in March 2020, while its market cap has shrunk from $28bn back then to under $7.3bn today.
Since tabling its $22.4bn offer in September for Entain, which came to nothing, DraftKings has shed almost two-thirds of its value.
The continued sell-off recently comes as investors offload gambling stocks, with rivals Entain, Flutter Entertainment and US-facing operators experiencing falls.
Likewise, so-called stay-at-home stocks like Netflix, Peloton and Zoom have also plummeted in value of late as the tech rout deepens.
Seeing its shares in a tailspin these past few months will be a serious concern for DraftKings’ investors and co-founders Jason Robins, Matt Kalish and Paul Liberman.
When Robins spoke to EGR 14 months ago, the CEO talked up DraftKings becoming a $100bn company, while recently tweeting how his business will be worth $1trn by 2032.
However, this pure-play US operator has never turned a profit since launching with DFS a decade ago and continues to rack up losses as it expands into new states with sports betting and looks to acquire new users.
Despite revenue of $823m for the first nine months of 2021, net losses amounted to $1.19bn. In fact, this works out at $182,000 per hour. Or to put it another way, DraftKings is burning through $3,000 a minute.
It seems shareholders are not prepared to wait for the firm to become profitable amid promises of questionable TAMs and the branching out into the world of non-fungible tokens (NFTs).
DraftKings has also been shunted out of second spot in US online gambling by BetMGM as the MGM Resorts and Entain JV continues its upward growth trajectory.
DraftKings hopes to boost its igaming presence and target non-sports fans with the purchase of Golden Nugget Online Gaming in an all-cash deal, yet to complete, which valued the online casino operator at $1.56bn at the time.