Surprisingly large loss
Sports betting giant DraftKings has posted a first-quarter loss of $68.7m. The company, which went public in April, reported this surprisingly large loss on Friday. The cancellation of sporting events across the world due to the coronavirus pandemic will have played a significant role in this loss.
The Boston-based firm’s first-quarter loss was more than double the $29.5m loss reported for the first quarter of 2019. Wall Street was expecting a loss of $0.13 per share rather than the $0.18 loss per share that was announced. Total revenue for the quarter increased from $68m to $88.5m.
more than double the $29.5m loss reported for the first quarter of 2019
While acknowledging the effects of COVID-19 on the business, DraftKings CEO Jason Robins remains optimistic. Speaking about the growing user base, he said: “The engagement we continue to see from our customers validates the connection they have with our content, their passion for our products and most importantly their loyalty to our brand.”
DraftKings does not foresee the pandemic having an impact on its 2021 fiscal year or its long-term plans.
Impact of the coronavirus pandemic
The company continues to deal with the widespread postponements of sporting leagues and events that are impacting the DraftKings business. There are some green shoots appearing, with the UFC hosting live events this past Wednesday and last Saturday, and another is taking place this weekend. Other sporting organizations are also planning to return to action in the coming weeks.
The aftermath of going public
It was in April that DraftKings went public through a reverse merger. This saw the company combining with gaming software provider SBTech and a special-purpose acquisition company called Diamond Eagle Acquisitions.
Trading has been strong to date, with the company’s share price increasing by 10% to $19.21 on launch day. Many leading financial analysts have been bullish on the stock, with DraftKings’ shares rising by more than 9% to $27.60 on Friday.
Numerous big-name investors are on board, including billionaire investor George Soros. A number of owners of major league sports teams also own a stake in the company. This includes Dallas Cowboys owner Jerry Jones and New England Patriots owner Robert Kraft.
