2. DraftKings Inc. (NASDAQ:DKNG)
Year-over-Year Revenue Growth in FQ3 2023: 57.4%
Year-over-Year Revenue Growth in FQ4 2023: 44%
Year-over-Year Revenue Growth in FQ1 2024: 53.2%
Number of Hedge Fund Holders: 64
DraftKings Inc. (NASDAQ:DKNG) is a Massachusetts-based digital sports entertainment and gaming company that provides various products and services, including online sports betting and casino, DraftKings marketplace, and more. Investor sentiment was positive toward DraftKings Inc. (NASDAQ:DKNG) in Q1 as 64 hedge funds had stakes in the stock with a total stake value of $3.1 billion. This is compared to 55 funds, with positions worth $2.24 billion in the preceding quarter.
DraftKings Inc. (NASDAQ:DKNG) has a consensus strong buy rating among 26 analysts, and its average price target of $54.04 implies an upside of 50.87% from the last price of $35.82, as of May 30. It is among our best up-and-coming stocks to buy according to hedge funds.
On May 3, DraftKings Inc. (NASDAQ:DKNG) reported impressive first-quarter results with revenue growing by 53% year-over-year to reach $1.175 billion. The company’s increased guidance for fiscal year 2024 now projects revenue in the range of $4.8 billion to $5 billion, which reflects robust year-over-year growth expectations. Adjusted EBITDA for the year is forecasted to be between $460 million and $540 million. According to the company management, the key drivers of this financial success include efficient customer acquisition, enhanced engagement strategies, and a structural sportsbook hold percentage that is expected to rise to approximately 10.5% in fiscal year 2024. Finally, with a projected free cash flow of approximately $400 million in FY 2024 and cash and cash equivalents expected to reach around $1.6 billion by year-end, DraftKings Inc. (NASDAQ:DKNG) maintains a robust financial position.
Baron Discovery Fund stated the following regarding DraftKings Inc. (NASDAQ:DKNG) in its first quarter 2024 investor letter:
“Shares of DraftKings Inc. (NASDAQ:DKNG), a leading online sportsbook in the U.S., rose during the quarter following an earnings release that showed strong market share gains and an improved outlook for future profitability. Market share capture has been driven by investment in innovative product offerings that are resulting in strong customer retention. The company also announced the acquisition of JackPocket, a digital lottery courier service. We believe the acquisition will help DraftKings achieve a first-mover advantage in many states that offer the JackPocket service but have not yet legalized online sports betting and casino gaming. DraftKings is well positioned to expand margins and generate positive free cash flow as it grows revenues alongside the rapidly expanding U.S. sports betting market, in our view.”
