Sports betting and online gaming company DraftKings Inc DKNG could highlight early results from the 2024 NFL season and new state legalizations when the company reports third-quarter financial results Thursday after market close.

Earnings Estimates: Analysts expect the company to report third-quarter revenue of $1.11 billion, up from last year’s third-quarter total of $789.96 million according to data from Benzinga Pro.

The company missed analyst estimates for revenue for the second quarter and two of the past three quarters, but has beaten analyst estimates for revenue in eight of the last 10 quarters overall.

Analysts expect DraftKings to report a loss of 42 cents per share in the third quarter, compared to a loss of 35 cents per share in last year’s third quarter. The company has beaten analyst estimates for earnings per share in 10 straight quarters.

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What Analysts Are Saying: Strong market share in the sports betting space and the potential to surprise with updated financial guidance has Bank of America analyst Shaun C. Kelley bullish on DraftKings ahead of the earnings report.

The analyst, who has a Buy rating and $50 price target, recently said revenue flowthrough for the second half of the fiscal year could be better than expected and “protect” EBITDA for fiscal 2024.

“We expect top-line growth in the fourth quarter to come in slightly below guidance driven by unfavorable hold and challenging iGaming comps,” Kelley said.

The analyst said DraftKings could also show its hold expansion similar to peer FanDuel with lower promotional spending activity.

Concerns for DraftKings in the third quarter include slower app downloads and unfavorable NFL game outcomes, Kelley added.

A near duopoly of the online sports betting space for DraftKings and FanDuel owner Flutter Entertainment FLUT was highlighted by Needham analyst Bernie McTernan recently.

McTernan said the total addressable market size of the U.S. online sports betting market could “continue to surprise to the upside.”

“Scale and commitment to product leadership from FanDuel and DKNG likely keeps the OSB market dominated by these two players,” McTernan said.

A Needham survey revealed that sports bettors primarily use FanDuel and DraftKings.

“We think share can continue to ebb and flow between FanDuel and DKNG as we do not see a physical network effect in OSB meaning there is not a structural reason for dominant market share leader like digital marketplaces.”

McTernan said unless the market structure in the U.S. changes, it’s “FanDuel and DKNG at the top and then everyone else.”

FanDuel (37.8%) and DraftKings (34.8%) had a combined 73% market share in 2023. BetMGM ranks a distant third at 8.6% market share.

In the second quarter of 2024, FanDuel had a market share of 37.3% with DraftKings at 37.0%. Both BetMGM and fourth-place Caesars had lower market share in the first two quarters of 2024 compared to 2023.

Key Items to Watch: DraftKings quarterly financial results come after the start of the 2024 NFL season, which is one of the most bet on sports in the U.S. and a key to revenue and earnings for the company in the fourth quarter.

Guidance from the company and early commentary on the NFL season will be closely watched by investors.

The company announced an inaugural $1 billion share buyback in the second quarter. Investors and analysts will be watching to see if any shares were bought during the third quarter.

DraftKings acquisition of Jackpocket led to lower average revenue per monthly unique paying customer in the second quarter and could be an area to watch for investors and analysts.

As of July 25, DraftKings is live with mobile sports betting in 25 states and Washington, D.C., representing 49% of the U.S. population.

The company is live with iGaming in five states.

On Tuesday, voters in Missouri approved sports betting, becoming the 39^th state to legalize. There is no current timetable on when the state will be live, but DraftKings and FanDuel supported the ballot proposal.

Missouri is the 18^th most populous state and fourth-largest state that has not yet legalized sports betting, according to a report from Sportico.

DraftKings previously said there were 10 jurisdictions representing 12% of the U.S. population that have introduced legislation or introduced a bill for a referendum to legalize mobile sports betting.

An update on the timetable in Missouri and where other states stand could come from the company on Thursday.

DKNG Price Action: DraftKings stock was up 4.94% to $38.25 on Wednesday at market close versus a 52-week trading range of $28.69 to $49.57. DraftKings stock is up 14% year-to-date in 2024.

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