Shares of online gambling company DraftKings (DKNG -3.46%) fell as much as 5.6% in trading on Friday after the company reported first-quarter 2021 results. At 2 p.m. EDT today, shares were still down 4.7% for the day.
Revenue jumped an incredible 253% to $312 million, although the net loss exploded from $68.7 million a year ago to $346.3 million in the first quarter. Management spent more on sales, marketing, general, and administrative costs than the revenue generated.
On an adjusted basis, which pulls out one-time items, the loss was $0.36 per share, which was better than the $0.44 loss that Wall Street expected.
Another positive was management increasing full-year revenue guidance from between $900 million and $1 billion to a range of $1.05 billion to $1.15 billion.
Investors knew top-line results were going to be good given the expansion of online gambling in the U.S., but that hasn't translated to better performance for this growth stock. What investors seem to be concerned about finally is the fact that DraftKings is getting nowhere near profitability despite its growth. And if that trend continues, it'll be tough to value the stock, especially as land-based casinos open and start to take market share back again.