Consumer Discretionary
Hesham Shaaban expects DKNG’s Q3 results to miss consensus, with Periphery’s revenue trackers showing mixed y/y growth in Jul and Aug and their new NFL Upset Tracker pointing to a weak Sep (total upsets down ~33%). He had planned to increase his short into Q4 to capture the downward revision cycle but notes the buyside has already sniffed out the early fallout from the NFL season. Looking ahead, he anticipates management will cut FY25 guidance while going big with their initial 2026 guide to backstop the stock - a pattern seen in both 2024 and 2025. With history likely to repeat, Hesham may still add into the revision cycle but could reduce exposure ahead of the Q3 print.
Edition: 221
- 03 October, 2025
Flutter & DraftKings: Bespoke CEO project
Consumer Discretionary
Paragon Intel is launching a bespoke CEO assessment project on FLUT’s Jeremy Jackson and DKNG’s Jason Robins. While both leaders boast headline achievements, they now confront converging pressures - higher state betting taxes, rising CAC, regulatory scrutiny and complex integrations. With Robins shifting focus towards FCF generation and Jackson tasked with defending FanDuel’s margin edge amid intensifying competition, Paragon will evaluate whether each CEO possesses the capital-allocation discipline, governance model and operating rigour to convert scale into durable profitability. They will also explore how differences in ownership control impact succession, strategic agility and shareholder alignment as the US sports betting market matures.
Edition: 216
- 25 July, 2025
Consumer Discretionary
Another miss, another excuse - this is now the 4th consecutive quarter that DKNG has missed on revenue. This is also the 7th consecutive quarter where Sports Outcomes were a y/y headwind to revenue growth. As a bookmaker, DKNG’s core job is to set odds and it is become increasingly worse at doing so. Hesham Shaaban remains bearish, expecting management will have to cut 2025 guidance (again); noting it relies on the same flawed assumptions as 2024, which was revised down twice. Management also assumes 2024’s negative comps will become 2025 tailwinds, despite two consecutive quarters of poor results. Structural issues will become more evident now that DKNG is working with a slowing inorganic tailwind from new state launches.
Edition: 211
- 16 May, 2025
Consumer Discretionary
The underlying assumption between DKNG’s guidance releases for 2024 and 2025 are the same - that it can achieve EBITDA flow-through at a rate exceeding its highest level of gross profit flow-through in its reported history. However, the only way to get there is declining customer acquisition costs and / or reducing promotional intensity, and management effectively walked that assumption back on each of its 2024 EBITDA guidance cuts. Why would this suddenly change in 2025? DKNG’s fundamental story is so structurally broken that Hesham Shaaban may just leave his short on indefinitely.
Edition: 199
- 15 November, 2024
Online Sports Betting / iGaming: Eyes on the prize
Consumer Discretionary
Arete sees the US OSB market growing revenues 6x by 2035E and looks likely to develop into a de facto duopoly. They assume FanDuel (Flutter) and DraftKings will take 70% combined share of handle and 75% share of revenues, with higher structural hold than rivals. Similar story in iGaming; the two companies are using product innovation to take share from legacy casinos and look on track for ~50% combined share, with upside from M&A. Arete has street high price targets for both names. DKNG offers the most upside (~100%) with Arete’s revenues delta vs. consensus improving from +8% in '24E to >30% by '26E, resulting in EBITDA estimates 42% and 51% above consensus, respectively.
Edition: 182
- 22 March, 2024
Consumer Discretionary
888 is unlikely to accept a takeover offer for the time being, according to CTFN's industry sources. This follows an article in the Sunday Times reporting that Playtech made a £1.56 per share offer for the company earlier this year. DraftKings has also held talks with certain 888 shareholders about an acquisition, but CTFN's sources said the company's founding shareholders, the Shaked family, would be unlikely to accept even a £2 per share deal. 888 is operating under new leadership and has a favourable debt package that gives it until 2027 to execute a turnaround.
Edition: 175
- 08 December, 2023
Consumer Discretionary
Hesham Shaaban believes the industry is running out of new states for OSB legalisation and DKNG can't lever its marketing spend much further on a now larger geographic footprint with certain states already showing signs of fatigue. Hesham doesn’t see a pathway to consensus 2024 EBITDA estimates. The maths basically translates to an incremental EBITDA margin of >60%, which on a standalone basis seems excessive, even before considering that its incremental gross profit margin has never touched that level. DKNG’s ad budget would need to decline y/y, which hasn’t happened in its reported history, and it would take a leap of faith to assume it could do so and produce consensus revenue growth of +20% at the same time.
Edition: 171
- 13 October, 2023
Flutter Entertainment (FLTR LN) UK
Consumer Discretionary
Now trades at a meaningful discount to peers despite dominant position in ALL its major markets - this has been caused by negative, but “fundamentally meaningless” headlines over the last few months. Another issue is that US investors are still not familiar with the company despite FLTR’s US revenues being 50% higher than the No.2 player (its US segment’s implied valuation is just 3.5x FY23 EV / Sales vs. 8x for DraftKings). A spin-out of FanDuel (possibly in 1H22) should provide a catalyst to crystallise the company’s SOTP value; or given the ongoing consolidation in the online gambling space, could Disney be lining up a takeover? TP £200 (80% upside).
Edition: 124
- 26 November, 2021