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Why DraftKings Is Falling Today

By Rich Duprey – Aug 14, 2020 at 11:52AM

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A dearth of events to bet on is weighing on the sports-wagering leader.

What happened

Shares of DraftKings (DKNG 9.42%) are falling 5% in morning trading after the sports-wagering outfit reported second-quarter results that struck out on hitting analyst earnings expectations.

So what

Although revenue was up 24% to $70 million as it got creative, developing new products for NASCAR, golf, and other sports not traditionally in the mainstream of sports betting, expenses rose much faster, particularly stock-based compensation for chair and CEO Jason Robins, which caused general and administrative costs to triple.

Football referee signaling a touchdown

Image source: Getty Images.

Now what

The lack of most sporting events in the quarter weighed on DraftKings' results, but pro baseball, basketball, and football are getting back into the swing of their seasons again. The sports-betting leader says it is expecting revenue in the second half of 2020 to jump 22% to 37% as a result, which suggests it's a good bet today's drop will be transient.

 

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$16.85 (9.42%) $1.45

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