Draftkings Inc (NASDAQ:DKNG) is set to report its first quarter earnings on May 8, with investor focus expected to shift beyond the known March Madness headwinds toward the company’s 2025 outlook and its ability to reaccelerate handle growth to reach its revenue guidance.
Bank of America analysts have adjusted their expectations downward for the quarter, with EBITDA estimates now at $120 million, revised from $149 million due to a weaker March hold.
However, they do not expect the firm to revise its full-year online sports betting and iGaming outlook.
“Despite the unfavorable outcomes late in Q1, we do not expect DraftKings to lower their online sports betting/iGaming outlook for the full year,” analysts noted, citing balance from a strong Super Bowl performance.
One new development that could impact the company's guidance is the recent shutdown of Jackpocket in Texas, which analysts estimate could result in a $50 million revenue and $30 million EBITDA headwind in 2025.
As a result, DraftKings may reduce the midpoint of its full-year EBITDA guide from $950 million to $920 million.
They also highlighted slowing same-state handle growth across the industry, with Q1 up 9% year-over-year compared to 11% in Q4 and 23% in Q3.
While some blame lower promotions or a shift toward parlays, the analysts wrote that these dynamics are already factored into the company's guidance.
“Management clearly needs to articulate what the offset is or what will re-accelerate growth to move past this debate,” they wrote.
Looking at 2025, other potential pressures include tax increases in New Jersey, Maryland, and North Carolina, estimated at a $60 million headwind, as well as the uncertain timeline for a Missouri sports betting launch, which could add $35 million.
The analysts have a ‘Buy’ rating on DraftKings and $60 price target. Shares gained 8% to trade hands at $38 in the early afternoon on Tuesday.