By Angela Palumbo

DraftKings stock was climbing Friday as investors decided to keep betting on the gambling stock despite a mixed first quarter.

DraftKings reported a loss of 7 cents a share after the stock market closed on Thursday. That was in line with the consensus call among analysts tracked by FactSet, but revenue came in at $1.41 billion, falling short of expectations for $1.43 billion.

Customers won big during the March Madness basketball tournament.

"Sport outcomes were once again customer-friendly in the first quarter," management said in a letter to shareholders. "A favorable Super Bowl was more than offset by favorites dominating the men's NCAA basketball tournament."

Flutter Entertainment, the parent company of FanDuel, another sports-betting platform, said on its earnings call on Wednesday that its first quarter was affected by "an unprecedented number of winning favorites during March Madness."

DraftKings also lowered its forecast of fiscal 2025 revenue to between $6.2 billion and $6.4 billion. The previous call was for $6.3 billion to $6.6 billion.

Still, the stock was up 2.1% to $36.09 late on Friday morning. Management said in the shareholder letter that if the March Madness results hadn't left customers with so many winning bets, they would have raised their financial forecasts. In addition, DraftKings said that the number of unique users of the platform increased 28% from a year earlier to an average of 4.3 million a month.

Investors also wanted to hear if DraftKings was concerned that people might gamble less as tariffs raise prices, leaving them with less money to spend. But management said on the call that the platform is well positioned to get through tough times and that online gambling was resilient during the 2008-2009 financial crisis.

"We remain positive on our pureplay Digital names within our coverage given their positioning in the L.T. [long-term] growth trajectory and Digital gaming's historical recession resiliency," Truist Securities analyst Barry Jonas wrote in a note on Thursday. He rates DraftKings at Buy with a target of $50 for the price.

Write to Angela Palumbo at angela.palumbo@dowjones.com

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May 09, 2025 12:18 ET (16:18 GMT)

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