DraftKings’ Share Price Plummets to All-Time Low

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Investors remain bearish

DraftKings’ woes continue as the sportsbook operator’s share price has plummeted to an all-time low. On Monday, the price dropped below the $11 mark for the first time since the company’s stock went public in April 2020.

monthly active users growth rose 29% year on year

DraftKings posted its Q1 results on Friday, with the news generally being positive. Monthly active users growth rose 29% year on year, with revenue for the quarter reaching $417m. The company has increased its total year revenue forecast to be close to or greater than $2bn. However, DrafKings’ share price has dropped over 23% since the announcement. 

Overall market sentiment

Responding to the struggling share price, DraftKings CEO Jason Robins told Action Network’s Darren Rovell that inflation concerns and overall macroeconomic instability are having a negative impact on investor sentiment. He maintained that these factors have not resulted in any sort of material drop off in its consumer spending levels. The operator has been spending huge sums of money in an effort to acquire new customers in the United States.

can no longer compete in the marketing spend arms race

The country’s sports betting sector has proven to be very competitive. Many operators in the US sports betting space have admitted that they can no longer compete in the marketing spend arms race. WynnBET has already significantly scaled back how much it is willing to spend acquiring new customers; Caesars Entertainment has done the same. In its recent quarterly results, Caesars revealed that it cut its sports betting marketing spend by over $250m in Q1 as part of an overall strategy shift. 

Cost-cutting measures

DraftKings’ share price is now down over 50% year to date and well below its all-time high price of almost $72 in March 2021. Most sports betting-related stocks are significantly down for the year also, despite results generally being better than initially expected. The overall stock market continues its selloff as a result of the global supply chain, inflation, and war concerns. 

In addition to offering sports betting in 18 US states, DraftKings also operates five online casinos and offers daily fantasy sports contests across the nation.

The drop in the DraftKings’ share price led to its all-stock acquisition of Golden Nugget Online Gaming last week having a much lower value than the $1.56bn it was worth at the time of the original announcement in August. DraftKings believes the deal will yield $300m in synergies and will help it tap into a different type of consumer. 

In the recent earnings report, DraftKings also revealed it has been reducing marketing costs, not spending as much on lower impact and high-cost local promotions, and putting more of a focus on national ad campaigns.

The post DraftKings’ Share Price Plummets to All-Time Low appeared first on VegasSlotsOnline News.



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