In the shimmering theater of Wall Street, the spotlight seldom falls on DraftKings, the online sports betting colossus, with a glow that signifies a bargain. Yet, as the narrative of financial prowess unfolds, whispers from the analyst realm suggest that DraftKings’ current valuation is not just attractive—it’s a steal, particularly in the panorama of high-growth firms.
The discourse shifted when Macquarie’s sage of stocks, Chad Beynon, proclaimed DraftKings to hold the title of an unparalleled deal in the grand bazaar of rapid expansion enterprises. This revelation came on the heels of the gaming juggernaut’s adjustment of its fourth-quarter forecast, an action that sent ripples of retreat through its stock prices. However, like a phoenix ascending, DraftKings’ shares surged anew, soaring 7.68% on volumes that dwarfed the daily norm, flamed by the fervor of analysts’ bullish sentiments.
At the heart of this financial drama lies the low NFL hold of October, a twist of fate where the betting public triumphed over the house. Yet Beynon, peering into the crystal ball of fiscal foresight, sees a horizon where earnings volatility wanes, and stability reigns supreme. In prose laced with investor jargon, he decreed, “Forward-looking, management’s vision encapsulates diminished EBITDA oscillations as it burgeons into a heftier slice of revenue pie—a winsome 30% target. This shall minify the flow-through’s impact.” Firmly, the company stands by the structural hold goal of 10.5% within the annual script, nurturing hopes to elevate it to 11% by the year ’25.
Lauding the online gaming titan’s performance, Beynon nobly upgraded the “outperform” marque on DraftKings’ escutcheon, hoisting the price target to $51, a gesture inferring an 18% ascension from the day’s curtain fall.
Amidst this spectacle of valuation, DraftKings emerges as a paragon of free cash flow (FCF) generation—a narrative that further endears it to the audience of potential stockholders. In the current act, many a growth company flounders without profits or the fruits of free cash. Yet DraftKings, as painted by Beynon, stands apart—its treasury blooming with the expectations of FCF. “Come the year ’25, the management envisions harvesting $850m in FCF, a rate of conversion standing at a noble 89%,” Beynon penned. “This forecasts a yield of free cash near 7% by ’26, a trove unmatched amidst the ensemble of high-growth prodigies.”
Should this prophecy be fulfilled, DraftKings could well claim the throne as the sovereign of FCF rates across the realm of online gaming. Such flourishing coffers could bolster shareholder return initiatives, including the reinforcement of a robust $1 billion share buyback decree.
Despite its enchanting narrative of growth and potential, DraftKings’ valuation does not come at knightly rates—trading at 75.55 times projected earnings and a 19.56x book value fortress. Still, it marches on as a growth stock, championed by its trajectory and brewing potential.
Beynon closes his tome with an ode to this digital arena’s champion, “DraftKings, a vanguard in the spirited chase for dominance in the U.S. online gaming empire, now strides into the dawn of profitability. The company, destined for double-digit revenue growth, stands poised, ready to etch its saga among the constellations of high-growth legends.”
