DraftKings Financially Stable Enough to Achieve Growth, asserts Morgan Stanley
In a recent analysis, financial giant Morgan Stanley has predicted that DraftKings will achieve an impressive EBITDA of approximately $260 million in the second quarter of 2025. This forecast surpasses both the consensus estimate of $225 million and DraftKings' own guidance of $200 million.
The optimistic projection is attributed to the robust growth in DraftKings' digital operations, particularly in online sports betting (OSB) and iGaming sectors. Morgan Stanley expects OSB handle to grow by 11.5% year-over-year, while gross gaming revenue (GGR) is projected to rise by 13%. These strong growth indicators underscore Morgan Stanley's confidence in DraftKings' ability to lead the Q2 earnings beat.
DraftKings' digital operations have been generating positive results across the United States, contributing significantly to the company's sustained growth in net gaming revenue. However, the company faces challenges, such as the new betting tax regime in Illinois and the potential impact of the regulatory landscape on its forecasts. Despite these challenges, DraftKings remains optimistic and is poised to continue delivering on its forecasts and exceed initial numbers.
Citi, another financial institution, has maintained its Strong Buy rating on DraftKings, reflecting its faith in the company's growth potential. The rating has been consistent over the past weeks, indicating a positive outlook for DraftKings' stock. In fact, the company's stock has increased by 17%, outperforming most companies in the S&P 500.
Land-based properties, however, are showing mixed signals due to reduced travel. This trend could potentially impact DraftKings' performance, as the company operates several land-based properties. Nevertheless, DraftKings is preparing to launch in Missouri, which will incur initial costs but could also provide opportunities for growth.
In conclusion, Morgan Stanley's prediction for DraftKings' EBITDA in Q2 2025 is a testament to the company's strong performance in the iGaming sector and its potential for continued growth in the digital sports betting market. While challenges remain, DraftKings' optimism and consistently positive results from its digital operations suggest that the company is well-positioned to meet and exceed its forecasts in the coming quarters.
The optimistic financial forecast for DraftKings, led by Morgan Stanley, is rooted in the anticipated growth of online sports betting (OSB) and iGaming sectors, which are key components of DraftKings' digital operations. This growth is due in part to technological advancements in these fields, transforming sports finance by offering accessible and convenient opportunities for sports betting.
