DraftKings Stock Price Adjusts After Surcharge Announced
Analysts Point to Earnings Report, Surcharge Fees
Stock analysts have lowered their target price on DraftKings stock. The move follows the company’s earnings report and plans to charge some bettors a surcharge on winning wagers.
Those surcharges will be issued to bettors from states with higher tax rates on sports betting revenue. While the DraftKings stock price adjusts in terms of target price, nearly all of the analysts kept the company on its buy list. DraftKings is always going to be a popular option for those who like to bet online.
DraftKings stock is expected to rise in price, just not to the same level as before the DraftKings stock price adjusts ratings changes. It closed at $30.14 Wednesday, but a number of stock analysts still have high hopes for the stock.
Goldman Sachs analyst Ben Miller lowered his target price from $60 to $54, but kept his buy rating. Stifel analyst Jeffrey Stantial kept his buy rating and changed the target price from $50 to $48. Wells Fargo analyst Daniel Politzer dropped his price target from $53 to $47.
Even if the stock were to reach the low end of the price targets, that’s still a pretty solid return. DraftKings stock has fluctuated quite a bit in the past year, trading anywhere between $25.41 and $49.57.
Surcharge Fees Not Well-Received
DraftKings announced its intentions to start charging bettors from Illinois, New York, Pennsylvania and Vermont a surcharge on winning bets beginning in January.
Those are the four states who tax sports betting revenue at greater than 20%. DraftKings CEO Jason Robins did say they have five months to finalize plans and possibly take another route.
“We thought through this quite a bit, but you never know,” he said. “So we do have some time between now and January 1st, and we’ll see what happens.”
If the company moves forward with the surcharge, there will be more than one negative DraftKings review, although that might be determined by the other sportsbooks and if they implement anything.
“I think every company has to do what’s best for their own business. I think we believe this is what’s best for us,” Robins said. “And I would imagine that if that’s our calculus, then others would come to the same conclusion. But we really don’t know and we’ll have to see.”
Analysts are looking at the DraftKings stock price adjusts recommendations a little different than customers. They may view it as a necessary move to maintain decent profit margins.
Those customers who are solely interested in placing their best bets today at DraftKings, may think it’s worthy of changing sportsbooks over. Who wants to start paying fees on winning bets?
In announcing the surcharge plan to stockholders:
“In Illinois, for example, it will amount to a low to mid-single digit percentage of the net winnings a customer would previously have received, but we believe additional upside potential exists for DraftKings’ adjusted Ebitda (Earnings before interest, taxes, depreciation and amortization) in 2025 and beyond from this gaming tax surcharge.” DraftKings said.
Some of DraftKings’ competitors in New York, such as BetRivers, have already announced they will not be following suit with the surcharge.
New Customers Only. Visit BETMGM.COM for Terms & Conditions. 21+ Years of Age or Olders. MI, NJ, PA OR WV Only. Excludes Michigan DISASSOCIATED PERSONS. Please Gamble Responsibly, Gambling Problem? CALL 1-800-270-7117 FOR CONFIDENTIAL HELP (MI). 1-800-GAMBLER (MI, NJ, PA, WV)
For Gambling news, odds analysis, and more, visit Point Spreads Sports Magazine.
