DraftKings (DKNG) Q3 earnings report preview: what to look for

Fantasy sports and betting company DraftKings DKNGwill be announcing earnings results this Thursday after market close. Here’s what investors should know.

DraftKings missed analysts’ revenue expectations last quarter, reporting revenues of $1.44 billion, down 4.6% year on year. It was a slower quarter for the company, with a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates. It reported 3.6 million users, up 9.1% year on year.

Is DraftKings a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members.

This quarter, the market is expecting DraftKings’s revenue to grow 21.3% year on year, improving from the 4.4% increase it recorded in the same quarter last year.

Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. DraftKings has missed Wall Street’s revenue estimates multiple times over the last two years.

Looking at DraftKings’s peers in the consumer discretionary - gaming solutions segment, some have already reported their Q3 results, giving us a hint as to what we can expect. Accel Entertainment delivered year-on-year revenue growth of 10.3%, beating analysts’ expectations by 1.4%, and Rush Street Interactive reported revenues up 38.8%, falling short of estimates by 0.7%. Rush Street Interactive traded down 10% following the results.

Read our full analysis of Accel Entertainment’s results here and Rush Street Interactive’s results here.

There has been positive sentiment among investors in the consumer discretionary - gaming solutions segment, with share prices up 4.7% on average over the last month. DraftKings is up 11.5% during the same time and is heading into earnings with an average analyst price target of $33.23 (compared to the current share price of $21.86).

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