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Draftkings (DKNG) Improves Bid for PointsBet's US Business
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DraftKings (DKNG - Free Report) has sent a letter to the non-executive chairman and chief executive officer of PointsBet Holdings Ltd. (“PointsBet”), presenting a proposed all-cash offer to acquire PointsBet's U.S. business for $195 million. This offer from DraftKings represents a 30% premium compared with PointsBet's current agreement to sell its U.S. business.
The offer, totaling $195 million, aims to surpass the $150 million agreement that PointsBet had previously reached with DraftKings' competitor, Fanatics, last month.
PointsBet has stated that it will review the offer from DraftKings before making a decision. In a letter to shareholders, PointsBet mentioned that, pending its assessment of the DraftKings bid, PointsBet still recommends voting in favor of the sale to Fanatics at the upcoming meeting scheduled for later this month.
DraftKings' superior proposal is underpinned by its advantageous position to merge PointsBet's U.S. business with its own well-established presence in the United States. This Proposed Transaction is expected to unlock substantial synergies and deliver value to DraftKings through various avenues.
The integration of PointsBet's product capabilities, including its distinctive "pointsbetting" functionality, will enhance DraftKings' product offerings.
Additionally, by incorporating PointsBet's technology, DKNG will bring trading capabilities in-house, reducing costs associated with external suppliers and thereby bolstering profit margins.
DraftKings foresees significant synergistic benefits from improved customer acquisition and monetization, streamlined marketing efforts and the optimization of fixed costs. The amalgamation of these factors underscores the company's belief in the value creation potential of the Proposed Transaction.
PointsBet Acquisition to Boost DraftKings’ Profitability
DraftKings' management anticipates the transaction to enhance its potential for Adjusted EBITDA in 2025 and beyond and not impact its expectations of achieving positive Adjusted EBITDA in 2024.
Management further mentioned its enthusiasm about the potential synergies that can be realized through the acquisition of PointsBet's U.S. business. The company highlighted the opportunity to provide customers with unique bet types and expedite the process of incorporating more of its in-house mobile sports betting technology.
DraftKings reported revenues of $770 million for the second quarter of 2023. This represents 84% growth when compared with the revenues of $417 million generated during the corresponding period in 2022.
The increase can be attributed to several factors, including effective customer acquisition strategies, innovative product offerings leading to higher profitability, reduced promotional activities in established markets and consistent customer retention rates.
Zacks Rank & Other Key Picks
Currently, DraftKings carries a Zacks Rank #2 (Buy).
Shares of DraftKings have gained 115.2% year to date compared with the Zacks Consumer Discretionary sector’s rise of 11.1% in the same time frame.
The Zacks Consensus Estimate for DKNG’s second-quarter 2023 loss per share is pegged at 29 cents. The Zacks Consensus Estimate for revenues is pegged at $714.58 million, indicating year-over-year growth of 53.28%.
Shares of Skechers have gained 23.5% year to date. The Zacks Consensus Estimate for SKX’s second-quarter 2023 revenues is pegged at $1.89 billion, indicating year-over-year growth of 1.42%. The consensus mark for earnings is pegged at 51 cents per share, which has remained unchanged over the past 30 days.
Shares of Stride have risen 27.3% year to date. The Zacks Consensus Estimate for LRN’s second-quarter 2023 revenues is pegged at $465 million, indicating year-over-year growth of 2.15%. The consensus mark for earnings is pegged at 86 cents per share, which has remained unchanged over the past 30 days.
Shares of Playtika have climbed 33.8% year to date. The Zacks Consensus Estimate for PLTK’s second-quarter 2023 revenues is pegged at $653.1 million, indicating a year-over-year decline of 0.99%. The consensus mark for earnings is pegged at 21 cents per share, which has remained unchanged over the past 30 days.
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Draftkings (DKNG) Improves Bid for PointsBet's US Business
DraftKings (DKNG - Free Report) has sent a letter to the non-executive chairman and chief executive officer of PointsBet Holdings Ltd. (“PointsBet”), presenting a proposed all-cash offer to acquire PointsBet's U.S. business for $195 million. This offer from DraftKings represents a 30% premium compared with PointsBet's current agreement to sell its U.S. business.
The offer, totaling $195 million, aims to surpass the $150 million agreement that PointsBet had previously reached with DraftKings' competitor, Fanatics, last month.
PointsBet has stated that it will review the offer from DraftKings before making a decision. In a letter to shareholders, PointsBet mentioned that, pending its assessment of the DraftKings bid, PointsBet still recommends voting in favor of the sale to Fanatics at the upcoming meeting scheduled for later this month.
DraftKings' superior proposal is underpinned by its advantageous position to merge PointsBet's U.S. business with its own well-established presence in the United States. This Proposed Transaction is expected to unlock substantial synergies and deliver value to DraftKings through various avenues.
The integration of PointsBet's product capabilities, including its distinctive "pointsbetting" functionality, will enhance DraftKings' product offerings.
Additionally, by incorporating PointsBet's technology, DKNG will bring trading capabilities in-house, reducing costs associated with external suppliers and thereby bolstering profit margins.
DraftKings foresees significant synergistic benefits from improved customer acquisition and monetization, streamlined marketing efforts and the optimization of fixed costs. The amalgamation of these factors underscores the company's belief in the value creation potential of the Proposed Transaction.
DraftKings Inc. Price and Consensus
DraftKings Inc. price-consensus-chart | DraftKings Inc. Quote
PointsBet Acquisition to Boost DraftKings’ Profitability
DraftKings' management anticipates the transaction to enhance its potential for Adjusted EBITDA in 2025 and beyond and not impact its expectations of achieving positive Adjusted EBITDA in 2024.
Management further mentioned its enthusiasm about the potential synergies that can be realized through the acquisition of PointsBet's U.S. business. The company highlighted the opportunity to provide customers with unique bet types and expedite the process of incorporating more of its in-house mobile sports betting technology.
DraftKings reported revenues of $770 million for the second quarter of 2023. This represents 84% growth when compared with the revenues of $417 million generated during the corresponding period in 2022.
The increase can be attributed to several factors, including effective customer acquisition strategies, innovative product offerings leading to higher profitability, reduced promotional activities in established markets and consistent customer retention rates.
Zacks Rank & Other Key Picks
Currently, DraftKings carries a Zacks Rank #2 (Buy).
Shares of DraftKings have gained 115.2% year to date compared with the Zacks Consumer Discretionary sector’s rise of 11.1% in the same time frame.
The Zacks Consensus Estimate for DKNG’s second-quarter 2023 loss per share is pegged at 29 cents. The Zacks Consensus Estimate for revenues is pegged at $714.58 million, indicating year-over-year growth of 53.28%.
Some other top-ranked stocks from the broader sector, which investors can consider, are Skechers (SKX - Free Report) , Stride (LRN - Free Report) and Playtika (PLTK - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Skechers have gained 23.5% year to date. The Zacks Consensus Estimate for SKX’s second-quarter 2023 revenues is pegged at $1.89 billion, indicating year-over-year growth of 1.42%. The consensus mark for earnings is pegged at 51 cents per share, which has remained unchanged over the past 30 days.
Shares of Stride have risen 27.3% year to date. The Zacks Consensus Estimate for LRN’s second-quarter 2023 revenues is pegged at $465 million, indicating year-over-year growth of 2.15%. The consensus mark for earnings is pegged at 86 cents per share, which has remained unchanged over the past 30 days.
Shares of Playtika have climbed 33.8% year to date. The Zacks Consensus Estimate for PLTK’s second-quarter 2023 revenues is pegged at $653.1 million, indicating a year-over-year decline of 0.99%. The consensus mark for earnings is pegged at 21 cents per share, which has remained unchanged over the past 30 days.