Draftkings Inc (NASDAQ: DKNG) stock fell 7.01% on August 30th, 2020 and continued its bearish momentum on August 31st, 2020 (as of 11:07 am GMT-4; Source: Google finance) after the company posted a bigger-than-expected loss for the second quarter but sales that topped estimates. The stock had already taken a dip after a Bloomberg report that the Internal Revenue Service will require fantasy sports companies to pay federal excise tax on their entry fees. The company has delivered a loss of $161.4 million, or 55 cents a share, in its fiscal second quarter to June 30, wider than the loss of $28.1 million, or 15 cents a share, posted in the year-earlier period. Revenue rose to $70.9 million from $57.4 million.
DKNG in the second quarter of FY 20 has reported the adjusted loss per share of 55 cents, beating the analysts’ estimates for the adjusted loss per share of 20 cents, according to the FactSet consensus. The company had reported the adjusted revenue of $70.9 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $66.4 million.
The company said pro forma revenue, including its merger with SBTech (Global) Ltd and Diamond Eagle Acquisition Corp., as if it got completed on Jan 1. 2019, would have been $75 million in the second quarter of 2020, compared to $83 million during the same period in 2019. The company ended the quarter with more than $1.2 billion in cash after a follow-on offering and has no debt. DraftKings has added over $800 million to its balance sheet.
The company saw increased engagement on its platform toward the end of the quarter as sporting events began to resume. This positive momentum got boosted with the return of MLB, the NBA, WNBA, the NHL, and MLS. In the second quarter, the Company worked creatively to engage fans with new fantasy sports and betting products for NASCAR, golf, UFC, and European soccer. DraftKings is now expecting pro forma revenue of $500 million to $540 million for fiscal 2020, equal to growth of 22% to 37%. The company is not expecting any impact to its long-term plans from COVID-19. This forecasts assumes that the professional sports calendar remains as currently contemplated and that DraftKings operates in the states in which it is currently live. DraftKings at this time does not expects an impact to its long-term plans due to COVID-19.