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DraftKings Shares Slump on Deep Quarterly Losses, Revenue Miss Estimates

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DraftKings shares slumped 10% on Friday after the U.S.-focused online gaming company reported worse-than-expected earnings and revenue in the third quarter but said the online gambling boom during COVID-19 boosted revenue by 60%.

Boston-based sports betting platform posted a quarterly loss of $1.35 a share on revenue of $213 million, worse than the market expectations of $0.98 per share on revenue of $236.9 million.  Following this DraftKings shares slumped about 10% in pre-market trading on Friday.

The company lifted the midpoint of its fiscal year 2021 revenue guidance to $1.26 billion and narrowing the guidance range of $1.21 billion to $1.29 billion to a range of $1.24 billion to $1.28 billion, which equates to year-over-year growth of 93% to 99%.

Analyst Comments

“We forecast legal US sports betting & iGaming to increase from <$1.5B in 2019 to $18B in 2025 with new states legalizing and higher spend per capita. Forecast DraftKings to maintain top tier share, 24% in sports betting and 20% in iGaming in 2025,” noted Thomas Allen, equity analyst at Morgan Stanley.

“Upside drivers include new product development and SBTech integration, though downside risks remain including increasing competition and lagging product innovation relative to peers. Relatively balanced NTM catalyst path.”

DraftKings Stock Price Forecast

Eighteen analysts who offered stock ratings for DraftKings in the last three months forecast the average price in 12 months of $68.44 with a high forecast of $105.00 and a low forecast of $41.00.

The average price target represents a 53.18% change from the last price of $44.68. From those 18 analysts, 11 analysts rated “Buy”, six rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $53 with a high of $126 under a bull scenario and $9 under the worst-case scenario. The firm gave an “Equal-weight” rating on the online gaming company’s stock.

Several other analysts have also updated their stock outlook. Citigroup initiated the coverage with buy rating and gave a target price $66. Craig-Hallum lifted the target price to $70 from $60. UBS upped the price objective to $64 from $60.

Technical analysis suggests it is good to sell now as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong selling opportunity.

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This article was originally posted on FX Empire