Shares of the online sports gaming company DraftKings (DKNG -1.29%) took a massive hit following the company's announcement of its fourth-quarter and full-year 2021 earnings results. Even though revenue growth came in ahead of expectations, the earnings outlook disappointed investors.

Consequently, the stock sells at close to a 75% discount to its 52-week high. This leaves investors having to decide whether DraftKings has become a great bargain or whether worsening losses make the leisure stock a lousy bet.

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The DraftKings earnings report

In the fourth quarter of 2021, DraftKings brought in revenue of $473 million, a level that rose 47% year over year. This also exceeded the $445 million forecast by analysts. Losses of $0.80 per share came in just ahead of analysts' expectations of an $0.81-per-share loss (Corporate Event Data provided by Wall Street Horizon).

The company reported full-year revenue of $1.3 billion, 102% higher than 12 months ago and above analysts' average estimate of $1.27 billion. Still, the loss of $3.78 per share fell short of the analysts' prediction of $3.66 per share.

Nonetheless, raising the 2022 revenue prediction to the $1.85 billion-to-$2 billion range did not compensate for a negative earnings outlook. The forecast for an adjusted EBITDA loss between $825 million and $925 million is an increase over 2021's $676 million loss. Traders showed their disappointment by selling DraftKings stock, and it fell by more than 18% in morning trading following the report.

Where the report leaves DraftKings

DraftKings appears to have become the victim of the tech sell-off. In an environment of falling stock prices and interest rates that will probably soon rise, investors have become unwilling to tolerate losses regardless of a company's potential.

But despite the sell-off, the DraftKings growth story remains intact. The company ended 2021 with almost 2 million monthly unique players, up from just under 1.5 million at the end of 2020. These players also continue to increase their spending. The average revenue per monthly unique player came in at $77 in Q4 2021, up from $65 in the fourth quarter of 2020.

Also, with recent launches in Louisiana and New York, 36% of the U.S. population can now bet on the company's online sportsbook while 11% can participate on its iGaming platform. That growth can expand further once it acquires Golden Nugget Online Gaming, a deal that will add 5 million customers.

Furthermore, the positioning of DraftKings stock could tempt some new buyers. DraftKings almost reached $75 per share nearly one year ago. Now, after this latest decline, its price has fallen to around $18.

Moreover, DraftKings now sells for a price-to-sales (P/S) ratio of 6. This is down considerably from the 23 P/S ratio it reached last fall. Admittedly, that makes it more expensive than some established casino companies like Wynn Resorts and Penn National Gaming, which trade at P/S ratios of 3 and 1, respectively. Still, it is cheaper than the sales multiple of 8 for Las Vegas Sands -- and with its massive growth, it may appear more appealing than its offline counterparts.

Should investors consider DraftKings?

Given the massive drop, investors may want to consider opening positions in DraftKings. Admittedly, the larger-than-expected losses may frustrate investors. However, if it keeps up the enormous revenue growth, it can eventually turn the earnings picture around over time. With its continuing user growth and rapid expansion, DraftKings looks like a top sports betting stock for 2022 at this lower valuation.