New App Enhancements Help DraftKings’ Revenue, But Stock Still Plummets

Written By Corey Sharp on November 9, 2022 - Last Updated on May 25, 2023
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DraftKings Sportsbook reported a mixed bag of results in a Q3 earnings call on Nov. 4. Product and functionality enhancements contributed to a solid revenue quarter and month of September.

DraftKings’ handle numbers finished close behind FanDuel Sportsbook in September, but its stock plummeted after the earnings call.

There are a lot of layers in DraftKings’ earnings report and ultimately, it’s leading to impatience from investors.

DraftKings Sportsbook closing gap on FanDuel in PA handle

FanDuel has consistently maintained a market share of 38-42% for online bets placed in PA since launching in July 2019. DraftKings has been second, but has hardly been able to make a dent in FanDuel’s success.

That changed in Sept. 2022 in what was DraftKings’ best month in terms of handle. FanDuel recorded a 33% market share, compared to DraftKings’ 32.1%.

Sept. 2022 online handle numbers:

  • FanDuel: $212,950,457
  • DraftKings: $207,520,797

DraftKings hasn’t been that close in handle since Sept. 2021, when FanDuel maintained a 34.8% market share to DraftKings’ 31.2%.

Seasonality might have a small influence in the numbers, but CEO Jason Robins pointed to other reasons on DraftKings’ Q3 earning call.

“The product enhancements have been substantial,” Robins said. “We shipped a lot of stuff right before the NFL and that created some real interesting points of differentiation as well as closed all material competitive gaps. Secondly, the lower promotion which is a larger story. It’s a subset of the rational competitive environment we’re seeing this year vs. last year. So if I had to point to anything, I’d say product enhancements were probably No. 1. No. 2 would be the more rational competitive environment and No. 3 this is seasonally a better time of year for us.”

DraftKings’ updated app offerings

DraftKings added a host of content and functionality enhancements that enabled them to close the gap on FanDuel.

New content debuted before the NFL season included:

  • H2H Matchups: Spreads, moneyline and totals on all player prop subcategories to improve depth of derivative player offering
  • Multi-Player Props: Same game, highest total from a list (player prop subcategories) to increase variety of player prop bet types
  • Player Flash Props: Player specific next drive and next play markets to increase depth of player performance offering
  • Full-Time and Anytime Squares: Model-driven squares product extended to every game of the season

New functionality enhancements included:

  • Early Payout: A newly-introduced mechanic to settle moneyline bets once a team reaches a certain point lead
  • Quick Parlay: A new interface for customers to build larger parlays with more cross-sport play
  • Quick SGP: Dozens of pre-packaged SGP bets per game for all SGP sports to increase volume of higher margin content
  • SGPx: Parlay SGP’s with other SGP’s and singles from different games (which increases the size and average leg count of parlays)

Robins said on the earnings call that DraftKingsparlay handle mix increased 5% (500 basis points) year-over-year in Q3 and its parlay bet mix increased 15% (1500 basis points).

Parlays continue to be a point of emphasis for DraftKings.

“I know we’ve talked about parlay a lot, but that’s just because we felt like that was where the biggest gap was competitively on the bet mix side and why we are holding below at least FanDuel,” Robins said.

The new functionality enhancements also increased live betting, which Robins is also keeping a close eye on.

“I think one of the really interesting things about the early win promo that we ran this year is that part of the design behind it was you’re paying out in game and can we use that to then merchandise and drive more live betting,” Robins said. “And we’ve seen a really good, I think, impact from when we’ve had those early payouts on driving up live betting. So it definitely continues to be a focus.”

DraftKings stock plummets after earnings call

Though Q3 delivered much better revenue results of $501 million compared to $212 million last year, DraftKingsstock took a major hit.

On Nov. 3, DraftKings’ stock closed at $15.67. After the call on Nov. 5, the stock opened at $13.23 and closed at $11.31. On Nov. 5 of 2021, DraftKings’ stock was $43.62.

DraftKings reported a $450 million loss in three months ending Sept. 30, and a $1.1 billion loss in nine months. Robins said he expects to “roughly breakeven” by Q4 2024.

According to a Yahoo Finance article, Jefferies LLC analyst David Katz said in a research note that “market patience remains thin” in the wait for profitability, even though DraftKings has enough cash on hand that “liquidity should not be a concern.”

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Corey Sharp

Corey Sharp is the Lead Writer at PlayPennsylvania bringing you comprehensive coverage of sports betting and gambling in Pennsylvania. Corey is a 4-for-4 Philly sports fan and previously worked as a writer and editor for the Philadelphia Inquirer and NBC Sports Philadelphia.

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