The online sports giant woke up investors with its bullish forecasts, swearing a second … [+]
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DraftKings stock began Wednesday after a rosy forecast that woke up Wall Street and made billionaire out of cofounder and CEO Jason Robins, according to Forbes. The increase also pushed the fortunes of its two co-founders to around $ 500 million each.
Shares of the fantasy and sportswear company daily jumped more than 11% Wednesday to close at $ 69.29 after an earlier day investor show that saw the company raise its long-term net income forecast time from $ 3.7 billion to $ 5.4 billion, while EBITDA targets rose to $ 1.7 billion from $ 1.2 billion. The news came on the heels of a stellar fourth quarter that saw monthly users jump 500,000 to 1.5 million from the previous quarter. DraftKings reported fourth-quarter revenue of $ 322 million, up 146% from $ 131 million a year earlier.
With the latest rise in DraftKings shares, 40-year-old Robins now have a net worth of $ 1.1 billion, according to Forbescalculation, leaving it as the company’s second billionaire, after Israeli entrepreneur Shalom Meckenzie. Robins completed DraftKings in 2011 alongside Matthew Kalish and Paul Liberman, whom they all met while working at marketing company Vistaprint. Kalish holds a 1.8% stake in the company with a value of nearly $ 500 million, while Liberman has a 2% stake worth nearly $ 550 million, Forbes estimates.
The company declined to comment on the news.
Meckenzie became a new billionaire in May 2020 after another share increase. He first founded gambling technology provider SBTech in 2007, which was part of a SPAC contract with the blank check company Diamond Eagle Acquisition Corp. to make DraftKings public in April last year. Meckenzie now chairs the DraftKings board and is one of the company’s largest shareholders with a net worth of $ 2 billion, according to Forbes.
DraftKings was created as an everyday fantasy sports center coming directly from Robins ’commitment to the place. “I was in 100 different ways [fantasy] leagues at one time, ”he said Forbes in November 2020. Working out of his bedroom, DraftKings began building capital and building momentum, eventually agreeing to deal with ESPN, MLB and the NHL.
Following an insider trading esque regulatory challenge from New York Attorney General Eric Schneiderman in 2015 and a failed union with FanDuel in 2017, Robins and his peers turned over most of the facilities towards sports gambling. In 2018, DraftKings then launched its first online sports book outside of Nevada in New Jersey.
It has benefited from an uptick in demand for sports gambling after the Supreme Court passed the Protection of Professional and Non-Professional Sports Act in May 2018. Since then, 20 states and Washington, DC have now gambling legalize sport, while five others have passed legislation but have yet to launch an activity. DraftKings estimates that the entire U.S. online sports betting market represents a $ 22 billion opportunity at 100% legalization, according to the company’s investor day presentation.
The SPAC union came amid epidemic coronavirus infection, despite the fact that there was almost no live sport to bet on. The stock has gone up about 250% since then. Robins, which raised about $ 54 million selling shares in 2020, still holds around 4% interest, including more than 11 million options.
The company’s outlook is rooted in the mainstream distribution of legal gambling, currently under consideration in California, Texas, Florida and New York, and the combined population of more than 100 million people.
“That’s probably like 60% of the U.S. sports betting market,” says Jeff Ifrah, founding partner at Ifrah LLC. “The whole prize right now is to get New York, Florida, Texas and California. These four states are going to make a difference. Anyone who gets those four states will clearly be in the driver’s seat. ”