Don’t Gamble on DraftKings

Popularity doesn’t pay [View in browser]( [The Spill Logo] BROUGHT TO YOU BY: [Logo]( Proprietary Data Insights Financial Pros’ Top Negative Cash Flow Stock Searches in the Last Month Rank Name Searches #1 'Draftkings Inc 210 #2 'Upstart Holdings Inc 149 #3 'Rivian 135 #4 'Plug Power Inc 120 #5 'Carvana CO Cl A 102 #ad [Exclusive Report of Q1’S Most Popular Stocks]( Brought to you by [Market Tactic]( [One Of The Richest Discoveries In Mexican History]( [Market Tactic - One Of The Richest Discoveries In Mexican History]( Located in a Mexican mining district, this little-known company could be on the brink of a major discovery... a world-class gold deposit. According to recent results, they could be seeing 10-15x more gold per ton than their closest competitors - and that's on top of sizeable grades of copper and silver. Translation: this could be one of the richest discoveries in Mexican history. Now the company is stepping out to either side of that big drill hole ...And with results expected any day, this may be investors last chance to catch a ride on the next big rocket ship ride in junior mining. [GET THE FULL REPORT NOW]( Don’t Gamble on DraftKings DraftKings (DKNG) did the unthinkable - they circumvented Federal gambling laws by calling sports betting ‘a game of skill.’ So, how is it they burn cash every quarter? Normally, we wouldn’t bother discussing a company this bad. However, financial pros, and especially retail, search this stock out constantly. In fact, it’s the most searched casino and gambling stock by financial pros by a mile. And that’s a problem, because this company looks like it’s headed for a buyout or bankruptcy. DraftKings’ Business DraftKings is a digital sports entertainment and gaming company that operates in the United States and Canada. They offer daily fantasy sports games as well as traditional sports betting. The company has partnerships with major sports leagues including the NFL, MLB, and NBA. In 2017, the company attempted to merge with its largest competitor but was blocked by the FTC. Draftkings went public in April 2020 and has become a mainstay in sports betting. Yet, the once monopolistic hold it had on sports betting is under threat from state laws and competitors. The company spends a massive amount of money on marketing, using promotions to lure in customers, anywhere from $130-$200 per unique user, and only gets them to spend around 2x that amount. Sure, they grow users like there’s no tomorrow. But how long can they keep it up? [Key indicators] [Source: DraftKings Q1 2023 Presentation]( The latest quarterly results showed 2.8 million users, double what they had in Q3. Yet, the average revenue per user was $92, down from +$100 for every quarter in 2022 except Q1. Financials [Margin] Source: Stock Analysis DraftKings has never turned a profit. They were briefly operating cash flow positive in Q3 of 2022, the first time since Q3 of 2020. But they’ve always burned cash on an annual basis. Right now, that’s coming in around $500 million each year. The company has $1.3 billion in total debt and $215 million in net debt, of which $1.1 billion is cash. Hemorrhaging money, the company was forced to issue a ton of stock in 2020, followed up by a massive $1.3 billion debt load in 2021. Given their forecast doesn’t talk about positive cash flow in 2023, they’ll likely need to raise more cash in the near future. Valuation [Valuation] Source: Seeking Alpha To provide a proper point of comparison, we stacked DKNG up against similar gaming and casino stocks. Rather than belabor the point, we’ll just state the obvious - all the others turn a profit. And Wynn Resorts (WYNN), a company dependent upon the Chinese economy, is expected to be nicely cash flow positive in 2023. Growth [Growth] Source: Seeking Alpha DraftKings certainly knows how to grow sales. But that’s about it. None of its peers come close to the same rates. But MGM, a key competitor in the sports betting market, is delivering some healthy numbers. Profitability [Profit] Source: Seeking Alpha And then we come to profitability, something DraftKings has yet to find. MGM, for example, isn’t roses across the board. But again, its EBIT is expected to turn positive in 2023. [Invest in the future of cybersecurity today]( Time is running out on our second crowdfunding round. More than 5K investors have joined the Data Encryption revolution. Don't miss out! Join us today! [Learn what 5,000+ investors already know.]([Ad] Our Opinion 0/10 If we had one word to describe DraftKings, it would be a contraction - Don’t. The company bleeds money with no end in sight. Things aren’t going to get any easier. Yet, management seems to think cash flow isn’t a problem. Sure, the stock could triple or quintuple on a turnaround. But we aren’t about gambling here. We’re about investing. [-facebook-share]( [-twitter-share]( [-linkedin-share]( [-email-share](mailto:?body= https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D581226?utm_medium=ic-nl&utm_source=107909 ) News & Insights Just Spilled - [Nuclear ETFs are the New Hotness]( - [Power Your Portfolio With Alternative Investments]( - [We Upgraded PayPal to 9/10]( - [Does Budweiser’s Backlash Create Opportunity?]( [News & Insights-facebook-share]( [News & Insights-twitter-share]( [News & Insights-linkedin-share]( [News & Insights-email-share](mailto:?body= https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D581226?utm_medium=ic-nl&utm_source=107909 ) [We want to hear from you. Let us know your thoughts by clicking here]( [Ads][Link]( [InvestingChannel Logo](#) Follow us on: [Facebook Logo]( [LinkedIn Logo]( [Twitter Logo]( [Instagram Logo]( To ensure delivery of all emails, [allow us on your list]( Spill&email=TheSpill@news.investingchannel.com). Manage your subscriptions with our [preference center](. [Unsubscribe here.]( View our privacy policy [here](. Copyright ©2023 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc., newsletter is for information purposes only and is based on opinion. Futures, forex, stock, and options trading are not appropriate for all investors. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can ensure returns or eliminate losses. InvestingChannel, Inc., makes no representation or implication that using any of the methodologies or systems in this newsletter will generate returns or insure against losses. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions.