DraftKings (DKNG) Completely out of the closet. The “fantasy sports” company is now advertising “real money online casino games.”
DraftKings Casino offers digital versions of blackjack, slots, roulette, poker, craps and other casino games. As a result, DraftKings dropped all the pretense of a fantasy sports company. DraftKings is in the gambling business.
Casino gambling isn’t the only problematic activity at DraftKings, either. DraftKings is also betting on professional wrestling. DraftKings is its “Official Gaming Partner” World Wrestling Entertainment (WWE). In addition, DraftKings sponsors All Elite Wrestling (AEW) flagship pay-to-view go all out September 4, 2022. The DraftKings logo even appears on the AEW ring, beneath the wrestler’s blood.
Yes, DraftKings is betting on scripted events.I wonder if DraftKings will bet on soap operas or next week’s Dragon House The next episode.
Skeptics will wonder why DraftKings Inc. (NASDAQ: DKNG) is engaging in this dubious practice. My answer is that DraftKings hardly makes any money. DraftKings is a desperate company that will do anything to make money.
For example, on June 30, 2022, DraftKings reported quarterly revenue of $466.19 million, quarterly gross profit of $153.42 million, and no quarterly operating income. The good news is that DraftKings didn’t report an operating loss for 2022. The bad news is the operating loss for the last quarter, which DraftKings reported on December 31, 2021 of -$368.76 million.
However, DraftKings is growing. Stockrow estimates DraftKing’s revenue grew 56.65% in the quarter ended June 30, 2022. Revenue growth increased from 33.6% for the quarter ended March 31, 2022, and decreased from 316.57% for the quarter ended June 30, 2021.
DraftKings’ quarterly revenue increased from $297.61 million on June 30, 2021 to $473.19 million on December 31, 2021. Conversely, quarterly gross profit increased from $110.6 million on June 30, 2021 and $103.83 million on December 31, 2021.
I think DraftKings (DKNG) Show that gambling is a bad investment because it burns money.
For example, DraftKings reported quarterly operating “cash flow” of -$172.95 million on June 30, 2022. DraftKings reported no closing cash flow for June 30, 2022. DraftKings’ last period-end flow was -$245.19 million on December 31, 2021.
As a result, DraftKings’ business doesn’t bring in any cash. One reason for this is that, as a gambling company, DraftKings needs to pay customers for using its products by handing out prizes.
The scary thing is that the last time DraftKings reported quarter-end cash flow was on June 30, 2022, when it reported cash flow of $142.63 million. DraftKings reported cash flow of $2.818 billion at the end of the quarter ended March 31, 2021.
However, DraftKings only received this money through borrowings as indicated by the March 31, 2021 quarterly financing cash flow of $1.129 billion. However, DraftKings’ debt is stable. DraftKings reported total debt of $1.334 billion as of June 30, 2022. Total debt decreased from $1.324 billion on June 30, 2021.
DraftKings (DKNG) As of June 30, 2022, the company had $1.514 billion in cash and short-term investments. Cash and short-term investments decreased from $2.647 billion on June 30, 2021.
Conversely, DraftKings had total assets of $4.154 billion on June 30, 2022. Total assets decreased from $4.359 billion on June 30, 2021. As a result, DraftKings has depreciated over the past year.
Mr. Market agrees with this assessment. Shares of DraftKings fell from $61.07 on September 2, 2021 to $15.49 billion on September 2, 2022. As a result, DraftKings shares have lost nearly three-quarters of their value in a year.
I think DraftKings stock is crashing and sliding into the junk category. I would expect them to get out of the stock as soon as possible before it loses all its value.
DraftKings (DKNG) And other companies have a dirty secret hidden in plain sight. That dirty secret is gambling addiction.
It is difficult to determine the extent of gambling addiction because it is difficult to see gambling addicts. Gambling addicts, for example, don’t go wild, get drunk or get excited, so you can’t spot them easily. However, gambling addiction is a growing problem.
The National Council on Problem Gambling (NCPG) estimates that there are between six and eight million problem gamblers in the United States. In detail, the NCPG estimates that approximately 2 million American adults have severe gambling addictions, while 4 to 6 million American adults are problem gamblers.
These numbers are likely higher because the NCPG claims that 1 percent of U.S. adults have a severe gambling addiction, while 2 to 3 percent of U.S. adults have a moderate gambling addiction. WorldoMeter estimates that the U.S. population was approximately 335.258 million as of September 1, 2022.
I count 1% of American adults as 3.36 million, or 3.36 million severe gambling addicts. Conversely, 2% of the 335.258 million people are 6.705 million people, or 6.705 million people are moderate gambling addicts. Meanwhile, 10.0577 million out of 335.258 million were mild or moderate gambling addicts.
Thus, there may be 13.418 million gambling addicts in the United States. This is a major social and economic issue. The scary thing is that it means millions of Americans are spending their rent or mortgages, as well as grocery stores, at online casinos.
I predict that gambling in the US will cause a huge backlash. Especially when there are news stories about people with good jobs and college degrees living in their cars because they spent all their money at DraftKings.
I think DraftKings (NASDAQ: DKNG) A terrible stock on three fronts. It loses money, its stock value plummets, and its business model is unethical, fueling addiction.
I advise smart investors to stay away from DraftKings and other gambling stocks as they lose money. My prediction is that DraftKings’ stock and online gambling business will collapse.