One-glance verdict
Within fair range
$25.80 our estimate vs market $20.78
Wall Street consensus: $33.84 (31.2% higher than our fair-value estimate)
19% below our estimate
Fundamentals snapshot
DraftKings Inc.
DKNG · NMS · Consumer Cyclical · Gambling
Current price
$20.78
52-week range
$18.35 - $36.98
Market cap
$10.32B
Balance sheet
Distressed
-5.35x Concerning
Net debt $932.13M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
2 Risks
2 rewards · 2 risks
- Reward Revenue grew 2.8% last year.
- Reward Free cash flow was positive in 2/10 years.
- Risk Net debt grew 4812.9% over 3 years.
- Risk Return on equity was -21.1% last year — the company lost money on shareholders' equity.
What this company does
DraftKings Inc.
DraftKings is a company that lets people bet on sports online and play casino games like blackjack and slots from their computers or phones. Most of their money comes from people placing these bets and playing these games, which is important because it shows how many people are using their platform and spending money on their entertainment.
How the company got here
DraftKings started in 2012 as a daily fantasy sports (DFS) company, born from a passion for fantasy sports that its founders, former Vistaprint colleagues Jason Robins, Matthew Kalish, and Paul Liberman, wanted to improve. Initially operating out of a spare bedroom, the company quickly grew, becoming a major player in the DFS space. A significant turning point came in 2018 when the U.S. Supreme Court repealed the federal ban on sports betting, opening up a massive new market. DraftKings strategically expanded into online and retail sportsbooks to capitalize on this opportunity, leveraging its existing brand awareness and customer base. In 2020, DraftKings became a publicly traded company through a merger, giving it access to public markets and further strengthening its technological capabilities by integrating with SBTech, a sports betting technology provider.
What it actually does
DraftKings is a digital sports entertainment and gaming company. At its core, it allows people to engage with sports in new ways beyond just watching. This includes placing bets on the outcomes of sporting events (sportsbook), playing fantasy sports contests where users draft teams and score points based on real-life player performance (daily fantasy sports), and playing online casino games like blackjack and slots. The company also develops the technology behind some of these platforms.
Online Sports Betting
This is DraftKings' sports betting platform, where customers can wager money on the outcomes of various sporting events. Think of it like placing a bet at a physical sportsbook, but done through an app or website. Users can bet on professional and college sports, with options ranging from predicting the winner of a game to more specific bets like the total number of points scored. This segment is a major revenue driver for DraftKings, especially as more U.S. states legalize sports betting.
Online Casino
This segment offers traditional casino games that can be played online, where legally permitted. It includes popular games like blackjack, roulette, and various slot machines. Customers play these games for real money, and this part of the business is known for its strong economics, meaning it can be quite profitable. DraftKings aims to provide an immersive casino experience through its app and website.
Daily Fantasy Sports (DFS)
This is where DraftKings began. In DFS, users create virtual teams of real athletes and compete against others based on the athletes' performance in actual games. Unlike traditional season-long fantasy leagues, DFS contests are typically for a single day or a short period, offering quick competition and the chance to win cash prizes. This segment leverages DraftKings' deep understanding of sports and player statistics to engage fans.
What management is betting on now
DraftKings is focusing on integrating its various offerings into a single, user-friendly 'Super App' called DraftKings Sports & Casino. This strategy aims to make it easier for customers to move between sports betting, casino games, and fantasy sports, encouraging more engagement and spending across all products. They are also investing in prediction markets, which are a newer, federally regulated form of betting on future events, seeing it as a significant growth opportunity. The company is also prioritizing operational efficiency and profitability, ensuring that its growth translates into sustainable financial success.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$130.88M
FY2024 Q4
$323.16M
FY2025 Q1
$-121.66M
FY2025 Q2
$169.60M
FY2025 Q3
$283.04M
FY2025 Q4
$316.52M
FY2026 Q1
$-55.52M
FY2026 Q2
$106.85M
Revenue
$1.44B
Net income
$-67.61M
Diluted EPS
-0.14
Operating cash flow
$111.44M
Free cash flow
$106.85M
Fetching…
Sources
Revenue
$1.65B
Net income
$21.07M
Diluted EPS
0.03
Operating cash flow
$-48.44M
Free cash flow
$-55.52M
Fetching…
Sources
Revenue
$1.99B
Net income
$136.43M
Diluted EPS
0.28
Operating cash flow
$320.47M
Free cash flow
$316.52M
Fetching…
Sources
Revenue
$1.14B
Net income
$-256.79M
Diluted EPS
-0.52
Operating cash flow
$287.48M
Free cash flow
$283.04M
Fetching…
Sources
Revenue
$1.51B
Net income
$157.94M
Diluted EPS
0.30
Operating cash flow
$173.92M
Free cash flow
$169.60M
Fetching…
Sources
Revenue
$1.41B
Net income
$-33.86M
Diluted EPS
-0.07
Operating cash flow
$-119.02M
Free cash flow
$-121.66M
Fetching…
Sources
Revenue
$1.39B
Net income
$-134.85M
Diluted EPS
-0.25
Operating cash flow
$325.19M
Free cash flow
$323.16M
Fetching…
Sources
Revenue
$1.10B
Net income
$-293.69M
Diluted EPS
-0.60
Operating cash flow
$133.58M
Free cash flow
$130.88M
Fetching…
Sources
Is it cheap or expensive?
Fair value $25.80 vs current price $20.78
Wall Street consensus is the average analyst price target: $33.84 (31.2% higher than our fair-value estimate).
Our most-likely fair value is $25.80 a share — about 24.1% away from today's price of $20.78, so the stock currently looks fairly priced.
Is it drowning in debt?
Distressed
Net debt $932.1M. Interest coverage -5.3x.
Net debt
$932.13M
Interest coverage
-5.35x
DraftKings Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 3 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
DKNG
BASELINE
DraftKings Inc.
Total debt $1.92B Interest coverage -5.35x This is the baseline the peer rows are being compared against.
Total debt $12.58B Interest coverage 0.94x This peer still has a real interest-payment cushion, while DKNG does not.
Total debt $11.06B Interest coverage 0.67x This peer still has a real interest-payment cushion, while DKNG does not.
Total debt $25.92B Interest coverage 0.89x This peer still has a real interest-payment cushion, while DKNG does not.
Total debt $30.16B Interest coverage 3.19x This peer still has a real interest-payment cushion, while DKNG does not.
Total debt $5.15M Interest coverage 152.57x This peer still has a real interest-payment cushion, while DKNG does not.
What you should know
The case for and against DKNG
2 Rewards
2 Risks
Rewards
-
Revenue grew 2.8% last year.
-
Free cash flow was positive in 2/10 years.
Risks
-
Net debt grew 4812.9% over 3 years.
-
Return on equity was -21.1% last year — the company lost money on shareholders' equity.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
12.18x
P/B
18.10x
P/S
1.66x
EV/EBITDA
91.58x
PEG ratio
0.06x
Profitability
How much profit each dollar creates
Gross margin
76.1%
Operating margin
-4.7%
Net margin
-2.7%
ROE
-21.1%
ROA
-2.4%
Health
Liquidity and balance-sheet strength
Debt / equity
3.36x
Current ratio
1.02x
Quick ratio
0.69x
Total debt
$1.92B
Total cash
$983.88M
Growth
How the business has been compounding
Revenue TTM
$6.22B
Revenue 5Y CAGR
39.3%
EPS TTM
-0.35
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$670.95M
Free CF TTM
$647.50M
FCF margin
10.4%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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