DraftKings Could Be EBITDA-Positive This Year, Profitable in 2024, Says Analyst

DraftKings (NASDAQ: DKNG) could be on rate to accomplish some long-awaited financial objectives this year, potentially stoking more upside inward the already raging stock.

In a promissory note to clients today, Jefferies analyst St. David Katz pointed come out that DraftKings could bring forth positively charged earnings before interest, taxes, wear and tear and amortization (EBITDA) this yr and potentially arrive at profitability by the second quarter of 2024.

Based on recent events and efforts past the company, we await positive Earnings Before Interest Taxes Depreciation and Amortization past the remnant of 2023 and profitability for the first clip in Q22024,” observed Katz. “We are adjusting our sit to reverberate higher revenue growing coupled with more or less bring down operating expenses for 2023 and 2024. We arrogate that SG&A costs are 28.1% and 25% of sales inward 2023 and 2024, versus 28.4% 25.3% prior.”

“SG&A” refers to selling, full general and administrative expenses — the day-to-day costs associated with running a business.

DraftKings Containing Costs…Sort Of

DraftKings is making strides inwards reducing marketing and promotional spending. That’s to the delectation of investors as highlighted by a year-to-date make headway of 69.89% past the stock.

In February, the gaming company said it is trimming its headcount by as much as 3.5% inwards a bid to rein inwards costs. Conversely, DraftKings lately announced the chess opening of a 90-square-foot business office in Las Vegas even though it’s not in time licensed to rule book wagers inwards Nevada.

DraftKings could farther melt off expenses if its board of directors prioritized more reasonable executive compensation, including reducing perks such as corporate spirt jaunt and non paying for CEO Jason Robins to go to major sporting events. For now, that doesn’t come along to be on the board’s agenda, but other cost-reducing efforts come along to live mien fruit.

“Driven by higher revenues and decreasing SG&A, DraftKings is strongly positioned to proceed performing positively inward the future,” added Jefferies’ Katz.

Not All Analysts Agree

There’s segmentation on Wall Street when it comes to DraftKings stock. Eighteen of the analysts natural covering the epithet value it the combining weight of “strong buy” or “buy”, but a dozen ring it a “hold” patch deuce value it a “sell.”

One of those deuce is Roth MKM psychoanalyst Duke of Windsor Engel who reiterated that bearish rating along with a $15 cost aim on DraftKings in a observe to clients shoemaker's last week. That calculate implies important downside from the stock’s stream terms around $19.35.

Engel pointed come out that with the domestic sports calendar moving toward its seasonally slow period, that leaves new state launches as the primary feather catalyst for sports wagering equities over the next several month. Problem is the legislative outlook is muted and with Texas unlikely to sanction sports betting before its legislative session expires inwards belatedly May, it’s unlikely any states of tone will live joining the effectual sports betting roster this year. Engel also cautioned that DraftKings’ revenue growing could slow up inwards 2024.

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