Despite short-term issues, many industry experts remain optimistic about the operator’s prospects for 2025 and beyond, noting positive trends in the online gaming sector.
DraftKings Inc. had a difficult December, with its stock down 10.62% in the last month. This underperformance contrasts with the larger market, which saw the Consumer Discretionary sector fall 0.11% while the S&P 500 Index rose 0.4%.
Retail investors are likewise dissatisfied with 2024’s big insider stock selling, which did not benefit DraftKinds’ shares.
DraftKings executives only sold shares
The current decline in DraftKings stock coincides with major insider selling. DraftKings’ director Paul Liberman sold $20.4 million in stock in December. Similarly, Chief Legal Officer R. Stanton Dodge sold 228.5K shares for $9.77 million.
MarketBeat data revealed that these choices came after a year of continuous insider selling, with insiders selling $205.54 million in stock in 2024.
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Insider selling has been falling over the quarters, with $66 million in Q1 and $34 million in Q4. Despite the lowering pace, ordinary investors remain apprehensive because none of the 20 insider transactions recorded for DraftKings in 2024 involved stock purchases. Furthermore, DraftKings’ annual return of 5.53% falls far short of its competitors’ great accomplishments.
Flutter Entertainment, DraftKings’ main competitor and the parent company of FanDuel, has had its stock rise 44.39% in 2024. To add to the gap, Flutter insiders have abstained from selling shares in recent months, exhibiting confidence that contrasts with DraftKings’ executive action and hints to the two management teams’ opposing strategies.
The company still has significant momentum
DraftKings is expected to release its full fiscal year profits soon, with analysts anticipating earnings per share (EPS) of -$0.79, up 54.34% from 2023. Experts predict $4.91 billion in revenue, increasing 33.95% year over year. While these estimates show growth, they have not alleviated retail investors’ fears about the company’s financial situation or the ongoing insider sell-off.
Nonetheless, Barry Jonas of Truist Securities remained positive about DraftKings’ prospects for 2025 and beyond, noting the company’s excellent technology and strong client acquisition trends as key growth drivers. However, he was relatively conservative in his cash flow forecasts, projecting $380 million in 2024, little below than Wall Street’s expectation of $395 million.
DraftKings faces a difficult task in regaining investor confidence. Insider selling, poor stock performance, and fierce rivalry from Flutter cast a pall over its recent accomplishments. However, DraftKings still has a few options to address these difficulties.
The corporation can encourage insider buying, show strong financial results, and reinforce its position against expanding competition.
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