What happened
Shares of online gambling company DraftKings (DKNG +1.41%) jumped as much as 16.2% in trading Friday after the company announced its first quarterly results as a public company.
So what
First-quarter revenue was up 30% to $89 million, and was up 60% pre-COVID-19 at the "old DraftKings." As strong as that growth was, the net loss more than doubled to $68.7 million, or $0.18 per share, as the company invested in growing the business.
Image source: Getty Images.
Management said that new products like esports, eNASCAR, and Korean baseball betting have offset some of the losses from the lack of live sports that COVID-19 has left behind. And it makes sense that betting will return to higher levels when sports resume in the next few months.
Now what
It's tough to make a judgment on whether or not DraftKings' stock is a steal right now given the losses it is reporting. And its $10.2 billion market cap is higher than a lot of huge casino companies at the moment. But investors are pleased to see that the business has stabilized despite COVID-19 headwinds, and they see a lot of potential for growth as sports return. Despite today's pop, I'll take a cautious approach and stay out of this high-flying stock until I know more about what the bottom line is going to look like long term.
