DraftKings Inc. continues to make significant progress in its business, with SVB MoffettNathanson anticipating a major milestone for the company. Analyst Robert Fishman predicts that DraftKings will report its first profitable quarter based on adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) in its upcoming results. This achievement is attributed to improved market conditions and DraftKings’ own advancements, as the company is closing the market-share gap with FanDuel in key states.
According to the FactSet consensus, analysts also expect positive adjusted Ebitda for DraftKings, with an average estimate of $16 million. However, Fishman highlights a potential threat on the horizon. Fanatics has outbid DraftKings for PointsBet U.S. and plans to finalize the deal in the coming months. Fishman raises the question to clients: “Is It Time To Worry About Fanatics Yet?”
On one hand, PointsBet U.S. currently holds a minimal market share and operates at a loss, accounting for only about 3% of the market. However, Fishman suggests that this acquisition could prove advantageous for Fanatics as it seeks to expand its empire in addition to selling sportswear and collectibles.
Fanatics and PointsBet Merger: A Boost for Online Sports Betting
In a recent report, industry analyst Fishman highlights the potential impact of Fanatics’ planned acquisition of PointsBet in the world of online sports betting. Although Fanatics is currently in beta mode in just four states, its collaboration with PointsBet is expected to provide a significant boost in the states where it operates.
One of the key advantages that Fanatics brings to the table is its existing relationships with leagues and athletes. However, it remains uncertain how aggressively the company intends to leverage these assets and how receptive sports fans will be to yet another online sports betting app. Nevertheless, with stronger financial backing than ever before, Fanatics aims to give incumbent leaders like DraftKings and FanDuel a run for their money.
Despite the positive market sentiment surrounding DraftKings, reflected in the more than 180% increase in shares this year, Fishman maintains a more measured view. With a market-perform rating on the stock and a target price of $25 (below the intraday level of around $30 on Friday), Fishman suggests caution.
Investors and analysts eagerly await DraftKings’ second-quarter results, which will shed more light on the company’s positioning in the highly competitive world of online sports betting.
Read: Why DraftKings CEO Jason Robins isn’t celebrating the company’s big year
Stay tuned for more updates as Wall Street awaits DraftKings’ second-quarter results.