DraftKings Inc. (NASDAQ:DKNG): Is Breakeven Near?

DraftKings Inc. (NASDAQ:DKNG) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. DraftKings Inc. operates as a digital sports entertainment and gaming company in the United States and internationally. The US$19b market-cap company’s loss lessened since it announced a US$802m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$548m, as it approaches breakeven. The most pressing concern for investors is DraftKings' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for DraftKings

Consensus from 33 of the American Hospitality analysts is that DraftKings is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$422m in 2025. So, the company is predicted to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 59%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth

Underlying developments driving DraftKings' growth isn’t the focus of this broad overview, however, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. DraftKings currently has a debt-to-equity ratio of 151%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of DraftKings to cover in one brief article, but the key fundamentals for the company can all be found in one place – DraftKings' company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

1. Valuation: What is DraftKings worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether DraftKings is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on DraftKings’s board and the CEO’s background.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com