DraftKings Stock Soars on Positive Forecast
DraftKings’ stock skyrocketed on Wednesday following an optimistic forecast that impressed Wall Street. This surge catapulted cofounder and CEO Jason Robins into billionaire status, according to Forbes. The stock jump also significantly boosted the fortunes of his cofounders, Matthew Kalish and Paul Liberman, with each now worth nearly $500 million.
Strong Financial Performance and Growth Projections
The stock climbed more than 11%, closing at $69.29, after an investor presentation raised its long-term net revenue projection from $3.7 billion to $5.4 billion. Additionally, EBITDA targets increased to $1.7 billion from $1.2 billion. The growth announcement followed an impressive fourth quarter where DraftKings gained 500,000 new monthly users, reaching 1.5 million. Fourth-quarter revenue surged to $322 million, marking a 146% rise compared to $131 million in the prior year.
Billionaire Status and Cofounder Fortunes
With this stock surge, 40-year-old Jason Robins now boasts a net worth of $1.1 billion, making him the company’s second billionaire after Shalom Meckenzie. Robins co-founded DraftKings in 2011 alongside Matthew Kalish and Paul Liberman, who met at marketing firm Vistaprint. Kalish holds a 1.8% stake worth nearly $500 million, while Liberman’s 2% stake is valued at approximately $550 million.
Shalom Meckenzie, a significant player in DraftKings’ history, became a billionaire in May 2020 after a previous stock rally. He founded SBTech, a gambling technology provider, which merged into DraftKings during the SPAC deal. Meckenzie remains one of the company’s largest shareholders, with an estimated net worth of $2 billion.
DraftKings’ Evolution and Legalization Opportunities
DraftKings began as a fantasy sports platform fueled by Robins’ passion. Initially operating from a spare bedroom, the company secured major partnerships with ESPN, MLB, and the NHL. After challenges like a failed merger with FanDuel, the company pivoted to sports gambling, launching the first online sportsbook outside Nevada in New Jersey in 2018.
The Supreme Court’s 2018 decision to overturn the Professional and Amateur Sports Protection Act opened the doors to legal sports betting. DraftKings now operates in 20 states and Washington, D.C., and estimates the total U.S. online sports betting market could reach $22 billion at full legalization.
Future Growth Hinges on Key States
DraftKings’ future growth depends heavily on legalization in populous states like California, Texas, Florida, and New York. “That’s probably like 60% of the sports betting market in the U.S.,” notes Jeff Ifrah of Ifrah LLC. Securing these markets is pivotal for DraftKings to maintain its dominance.
Despite obstacles, DraftKings has thrived, with its stock rising 250% since going public during the pandemic. Its continued success reflects the growing acceptance and expansion of legal gambling nationwide.
