Q1 of 2023 alone reported over $100 million in stock-based compensation. Combined with stock grants on with generous strike prices, it makes one wonder why the executives and board members at DraftKings continue to compensate themselves so handsomely as a reward for their -50% operating margin. CEO and founder Jason Robins, who has a firm control on capital stock voting power, raised his salary 238% year-over-year and expensed $132,000 for his family's Super Bowl experience. Management deferred the majority of the hard-hitting questions regarding a timeline for profitability to their Investor Day.Ī deeper dive into senior management presents some cause for skepticism. There is a reason DraftKings has to keep their spending high.

Their spending is ever-rising and there is no indication that a decrease is on the horizon. When you deconstruct this statement, you realize it is not as encouraging as it sounds. In another category, which DraftKings dubbed 'cost of revenue,' expenses swelled 66.4% to $521.7 million.ĭraftKings is celebrating a decrease in the rate of increase of spending. In last year's first quarter, DraftKings spent $321.5 million in the category, up 40.6% from the same period in 2021. In terms of percentage increase, DraftKings slowed the pace of spending. From SportsHandle:ĭraftKings has faced some criticism in the past for high marketing costs, and the company ended the quarter with $389.1 million in sales and marketing expenses, an increase of 21% from last year's quarter. Let's dive into the Q1 earnings report that resulted in a 15% share price increase on May 5. Markets reacted to the strong Q1 earnings report, and insiders reacted in turn by selling off over 1.5 million shares, worth around $37 million, since the beginning of May. How much longer will they be patient as senior management celebrate claims such as slowing the pace of increased spending? Reasons for ConcernĭraftKings top brass is telling us that they believe the stock is at a good selling point. Eventually, the time will come when shareholders demand profitability. There are reasons for concern regarding their long-term business strategy. However, many recent signs would suggest that it is due for a bit of a pullback in the coming weeks and months.

It has been a consistent climb from $11 to $25, an increase of 125%. DraftKings ( NASDAQ: DKNG) has started the year immensely well.

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