{ "docId": "019dd923-622c-750b-8b99-c6da1f4c0f8e", "docSlug": "fab8b03c0201", "documentTitle": "DraftKings Inc. (DKNG)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2025-10-03 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 11, "pageCount": 48, "prevPage": 10, "nextPage": 12, "slideType": "thesis_headline", "function": "summarize", "density": "dense", "nDataPoints": 8, "notes": "The slide uses a yellow background to highlight the core thesis statement.", "elementsJson": [ "headline_text", "paragraph" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-c6da1f4c0f8e/11", "deckHref": "/decks/019dd923-622c-750b-8b99-c6da1f4c0f8e", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-c6da1f4c0f8e.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-c6da1f4c0f8e#slide-11", "components": [ { "bbox": { "h": 0.1, "w": 0.96, "x": 0.02, "y": 0.84 }, "kind": "callout", "text": "Based on our analysis, we estimate approximately 35% to 60% potential downside risk ($14 to $22 per share). We expect DKNG’s share price to underperform the gaming industry and overall equity market.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6544da8c-1a19-4125-8361-de24665b872b", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "Based on our analysis, we estimate approximately 35% to 60% potential downside risk ($14 to $22 per share).", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-78b7-702e-962a-b04e8f2f6f01", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "downside risk: 35% - 60%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-78b7-702e-962a-b4b2b30e34a0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.96, "x": 0.02, "y": 0.68 }, "kind": "paragraph", "text": "Spruce Point believes that analysts are downplaying the tectonic shift that we believe is occurring in the sports betting market and its impact on DKNG. Analysts are using emotionally charged language and softening concerns with words like “potentially challenging” to justify buying its shares. However, with some analysts still projecting a price target over $60, a dozen analysts making no recent price target change at all, and the consensus target at $53 per share, we still see a wave of downgrades and disappointment as likely to pressure the stock.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0fe7b464-4e3e-4aae-ac15-791a1912dbe4", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.45, "w": 0.96, "x": 0.02, "y": 0.23 }, "kind": "paragraph", "text": "Spruce Point believes the launch of sports prediction exchanges comes at an unfortunate time in DKNG’s history. The Company is finally seeing some operating leverage and is starting to generate cash, however, average monthly unique player growth slowed from 57% YoY in Q3 ’24 to just 6% YoY in Q2 ’25. Handle grew ~15% YoY in both Q4 ’24 and Q1 ’25 but is down to just 6.3% YoY growth in Q2 ’25. The Company has done a nice job at diversifying away from its core OSB business but we believe further growth in iCasino will be challenging, states will likely continue to increase taxes, and the highly competitive and somewhat mature OSB marketplace will likely curtail handle growth. To our knowledge, Missouri and Alberta, Canada are the only two new markets expected through 2027. It’s not a question of are the sports prediction exchanges taking market share but rather a question of how much market share and how long can they seize on this opportunity. We believe DKNG’s 2025 and 2026 consensus revenue estimates appear very aggressive and DKNG’s revenue multiple will contract well below its historical average.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6506bf42-0252-4e0a-bfda-cc345a419aec", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.65, "x": 0.31, "y": 0.03 }, "kind": "title", "text": "We See 35% - 60% Downside Risk Potential In DKNG’s Share Price", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4d76445d-5469-42b1-8fc1-eadaa799d7c1", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 20, "from": 6, "beatId": "4e1c17fc-d0a4-422f-b00f-a3e72a45a04a", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "The Struggle", "beatSlug": "overcoming-monster-the-struggle", "evidence": "Detailed analysis of Kalshi's advantages and DKNG's challenges", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [ { "to": 20, "from": 10, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "1fe3f2db-9941-4d09-8a4b-bb2e75d91db2", "evidence": "Discussion of potential downside risk for DKNG investors", "position": 0, "objective": "What is the cost of inaction for DKNG investors?", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.7, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }