By Emily Dattilo

DraftKings stock fell on Tuesday after the online sports betting company launched a $500 million debt raise.

In midday trading, shares were off 5.4% to $50.59.

Launch of the Term B credit facility -- a loan made by institutional investors such as pension funds or insurance companies instead of by banks -- was announced in the early morning. DraftKings plans to use the net proceeds for general corporate purposes.

The stock's downturn marks a sharp reversal from the 15% gain on Friday, the day after the company reported earnings.

DraftKings fell short on fourth-quarter financial estimates but lifted the midpoint of its 2025 revenue guidance, which sent a flurry of Wall Street analysts raising price targets.

BTIG analysts Clark Lampen and Joseph Spiezio mentioned the brighter outlook. They reiterated a Buy rating and increased their price target to $64 from $59.

"While most investors we spoke with weren't expecting a guide adjustment, a slight bump to revenue range is a positive signal around potential ingame betting contributions to the year with Simplebet and other bolt-on product acquisitions now seemingly integrated," they wrote.

Simplebet is a business-to-business provider of micromarket pricing for a slate of professional sports leagues.

The company also reiterated its 2025 guidance for adjusted Ebitda, or earnings before interest, tax, depreciation, and amortization. The projection is $900 million to $1 billion.

Needham analysts, led by Bernie McTernan, estimate adjusted Ebitda can double to $2 billion in 2027 with high-teens revenue growth and about 40% incremental margins. They maintained a Buy rating and raised their price target to $65 from $60.

Jefferies analysts were also optimistic. The team, led by David Katz, wrote the adjusted Ebitda guide doesn't factor in the favorable sports results this year and argue the higher end of the range is now more likely. Jefferies maintained a Buy Rating and raised its price target to $63 from $54.

"Our bull case remains: in 2025 and beyond, DKNG will continue to see top-line growth, especially from in-game betting and increasing efficiency, that will increasingly convert" to Ebitda and free cash flow, analysts wrote.

Write to Emily Dattilo at emily.dattilo@dowjones.com

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February 18, 2025 12:58 ET (17:58 GMT)

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