DraftKings (DKNG 3.43%) stock is going through a patch of misfortune in September. The stock is down 10% in the month as of this writing. That's in stark contrast to the company's performance for the year. Revenue in the first two quarters of fiscal 2021 is ahead of expectations, prompting management to raise the bar for the rest of the year. So the stock is falling while operating performance remains excellent, which could present an opportunity for long-term investors. 

An office worker looking at his computer and cheering.

DraftKings stock is down 10% in September. Image source: Getty Images.

Accelerating revenue growth 

DraftKings is an online gaming company that allows customers to wager on sporting events and classic casino games like blackjack. The company is an alternative for people who want to participate in wagering activities but don't want to drive to a local casino. The biggest obstacle facing DraftKings is getting the approvals to operate in local jurisdictions. 

The company must get access to each market on a state-by-state basis. And before the company can apply for a license or permit, the local government has to legalize the various forms of gaming options offered by DraftKings. Thus far, DraftKings is operational in 43 states for daily fantasy sports, 14 states for mobile sports betting, and four states for iGaming. 

DraftKings is showing solid revenue growth as it enters these new markets. From 2017 to 2020, revenue increased from $192 million to $615 million. And it is estimating revenue will top $1.2 billion this year. The business is not yet profitable. With each new state it enters, DraftKings invests in marketing and promotion to acquire new customers.

Still, the company told investors that it would generate $1.7 billion in adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, at maturity. DraftKings has an enterprise value of $21.6 billion. The adjusted EBITDA estimate assumes the company's services being available in North America alone. If it gains access to international markets, the profit potential could be considerably richer.

Should you buy DraftKings stock right now? 

The company is certainly not cheap, trading at an enterprise value of 12.7 times an estimated adjusted EBITDA of $1.7 billion. The estimate of adjusted EBITDA makes several assumptions that may never come to fruition. And the figure is higher than any single year of revenue the company has mustered. Finally, even if you give management the benefit of the doubt and assume it will achieve the adjusted EBITDA target, it could take several years to complete the task.

Still, DraftKings is making excellent progress, accelerating revenue growth 17.9%, 42.9%, and 90% in 2018, 2019, and 2020, respectively. The business model of an internet gaming operator is inherently more profitable than land-based casinos. After spending on promotions to attract customers and building the technology, costs to serve customers are low.

DraftKings makes a compelling case to be included in portfolios for long-term investors with a high tolerance for risk. That being said, it may be prudent to wait for a further pullback in the stock price to make the purchase.