DraftKings (NASDAQ: DKNG) could emerge as a significant buyer of its own shares over the next 10 years, potentially retiring up to $18 billion worth of stock, according to Morningstar analyst Dan Wasiolek.
In a recent note, Wasiolek emphasized DraftKings’ solid financial footing, pointing out that the bulk of buyback activity would likely occur in the latter half of the 10-year period. Such a move would represent a major return of capital to investors and underscores the company’s strong balance sheet.
“DraftKings’ financial health is extremely sound,” he wrote. “The operator remains in a net cash position, closing 2024 with $1.33 billion in cash against $1.26 billion in long-term debt, which doesn’t mature until 2028. In addition, DraftKings has $500 million available through an untapped revolver.”
While the company hasn’t officially committed to an $18 billion repurchase plan, it is currently executing a $1 billion buyback program announced last year, retiring 6.5 million shares in the first half of 2024. An $18 billion effort, even spread over a decade, would be significant considering DraftKings’ market cap of $22.69 billion today and could offset dilution from insider selling.
Technology and Product Edge
In the highly competitive U.S. sports betting market, DraftKings and FanDuel dominate with a near-duopoly. DraftKings’ continued investment in product and technology—including in-game wagering capabilities—has strengthened its position.
Wall Street analysts have praised the company’s ability to expand its tech stack and product portfolio through strategic acquisitions. Its proprietary in-house technology platform, acquired in 2020, gives DraftKings greater control over data and product launches, fueling its competitive edge.
Wasiolek noted that DraftKings continues to lead in revenue despite intensifying competition, benefiting from stronger in-game betting and parlay products.
Brand Recognition a Key Moat
Morningstar assigns DraftKings a “narrow moat” rating, highlighting its strong brand presence and durable U.S. market share. While not a “wide moat” business, the brand’s recognition and digital scale remain a long-term advantage.
Wasiolek projects that DraftKings could deliver a 21% compound annual revenue growth rate from now through 2029, further cementing its role as one of the industry’s leaders.
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