DraftKings is paying over the odds to find customers. The online gambling firm said Friday that fourth-quarter revenue grew 47% and it predicts similar growth for 2022. Yet adjusted EBITDA loss could be as high as $925 million, about 50% more than analyst estimates, according to Refinitiv.
Friday that fourth-quarter revenue grew 47% and it predicts similar growth for 2022. Yet adjusted EBITDA loss could be as high as $925 million, about 50% more than analyst estimates, according to Refinitiv.
DraftKings has a cost problem. Last year, revenue totaled $1.3 billion, but the company lost $1.5 billion. The $14 billion firm still spends heavily on promotions, like offering 56-1 odds for certain new Super Bowl betters. The hope is that as markets become established, marketing costs fall. But 2022 guidance suggests competition means continued losses. That knocked a fifth off the firm’s shares on Friday. Yet it’s still valued at about seven times 2022 revenue. Rival MGM Resorts International is at less than three times. Unless DraftKings can control costs, it’s a longshot it can live up to its lofty valuation.
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