DraftKings (NASDAQ: DKNG) shares have expanded their recent bearishness on Monday after UBS forecasts a longer timeline for sports betting companies to lose more and profit.
In a note to clients today, the bank has set a DraftKings price target of $44. It's almost 10 percent above its current share, but its new forecast is 31 percent below the bank's previous price target. 33 Percentage below the Wall Street consensus.
UBS's call for the once popular name for sports betting occurs when the stock is mired on a two-month slide. DraftKings should increase by almost 18 percent in the past month, more than 50 percent to regain September highs
UBS's non-enthusiastic assessment of game fairness also arrives within two weeks of the Boston-based company providing financial information for the third quarter. The prediction is 2021It included a wider loss and earnings outlook than expected. Wall Street wasn't excited.
Ailing DraftKings Stock
In commenting on the weak results for the September quarter, DraftKings quoted Better's good luck in betting on the NFL. This trend does not appear to diminish as the operator's full-year forecast includes $. Clients who won the NFL action in October mainly caused a negative revenue impact of 1 million.
Other factors that explain the weakness of stock prices these days are involved. Analysts and investors are increasingly concerned about the difficult economic conditions in the online sports betting industry. In this industry, operators have to spend large amounts of capital to attract customers, and there is no guarantee that those customers will be loyal over the long term.
All that spending has led to losses per share in some companies. In that regard, UBS will have DraftKings next year and 2023, 2024.
Before making a profit based on it
Earlier this year, there was a general sentiment that DraftKings would be profitable on an EBITDA basis by 2023 at the latest. UBS's forecast is a bit darker than expected. Still, it's not as bad as Los Capital's outlook 2025, when DraftKings is a year to give up how to lose money.
DraftKings analysts apply further scrutiny
It wasn't long ago that bearish analyst chatter in DraftKings was seen as a heretic in the investment community. But as stock prices fall, these views are easier to defend.
Prior to the UBS call on Monday, the actions of the last four analysts against the DraftKings price target were each reduced. Two of them were accompanied by a lukewarm "hold". , And another rating is a "sale" rating.
These could be signs that Wall Street believes that state-by-state legalization papers are heavily considered for DraftKings stocks at this point. It also reflects the feeling that companies need to reduce losses in order to promote excitement among investors.
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