DraftKings Posts Wider-than-Expected Loss - Shares Off

DraftKings misses Wall Street's second-quarter expectations but beats revenue forecasts. The sports-betting operator's shares are off.
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DraftKings  (DKNG) - Get Report shares were down Friday after the sports-betting operator reported a wider-than-expected second-quarter loss, while beating Wall Street's revenue expectations.

Shares of the Boston company at last check were off 5.2% to $34.16.  

Bloomberg reported that the Internal Revenue Service would require fantasy sports companies to pay federal excise tax on their entry fees.

DraftKings posted a second-quarter loss of 55 cents a share, wider than analysts' expectations for a loss of 20 cents. Revenue in the period was $70.9 million, higher than forecasts of $66.4 million.

DraftKings said it ended the second quarter with more than $1.2 billion in cash and no debt on its balance sheet.

During the quarter, several major sports leagues, the National Basketball Association, Major League Baseball and the National Hockey League, remained on hiatus due to coronavirus. So the company "worked creatively to engage fans with new fantasy sports and betting products for Nascar, golf, Ultimate Fighting Championship, and European soccer," DraftKings said.

As sporting events began to resume, DraftKings said it saw "increased engagement with its sports-based product offerings, which contributed to sequential monthly revenue improvement during the second quarter."

The momentum has accelerated with the return of MLB, the NBA, the Women's National Basketball Association, the NHL and Major League Soccer, DraftKings said.

The company said it expected pro forma revenue in 2020 of $500 million to $540 million, assuming 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 anticipate an impact to its long-term plans due to covid-19," the company said.