DraftKings Inc (NASDAQ:DKNG) shares are down 20% Friday despite announcing strong revenue numbers and raising 2022 guidance. So why is the stock falling?
"I can't predict what the market is going to do. It's a wild market right now," DraftKings CEO Jason Robins said Friday on CNBC.
Robins said the company has been consistent in its approach, managing a two- to three-year path to profitability in each state. Five states are currently contribution profit positive and another five are expected to reach contribution profit positivity by the end of 2022.
"I think the model is working," Robins said. "We'll play the long game here. I'm very confident that once the market settles down and rationality kicks back in, the metrics we are putting out there will start to resonate."
A lot of investors seem to be worried about the marketing and promotional spend of DraftKings, but Robins said the approach is working, as DraftKings has seen excellent customer retention rates.
"Most of the promotional spend goes to new users, though as a market matures and there are less new users as a portion of total users, it's going to naturally come down," he said. "Same thing with marketing spend."
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Still, DraftKings will continue to spend on marketing and promotions because there will always be new competition entering the space, Robins noted.
He told CNBC the company will hold its Investor Day next month, which will focus on updating investors on how the company is tracking against its projections from last year.
"We believe in the playbook we're running now ... and we don't have to raise capital at all if we don't want to, so I think that's a great position that we find ourselves in," Robins said.
DKNG Price Action: DraftKings has traded as low as $17.41 and as high as $74.38 over a 52-week period.
The stock was down 17.5% at $18.20 at time of publication.
Photo: courtesy of DraftKings.
