{"id":206976,"date":"2022-03-28T13:21:41","date_gmt":"2022-03-28T20:21:41","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=206976"},"modified":"2023-03-22T20:46:08","modified_gmt":"2023-03-23T01:46:08","slug":"draftkings-genius-sports-big-in-stock-based-compensation","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/draftkings-genius-sports-big-in-stock-based-compensation\/","title":{"rendered":"DraftKings, Genius Sports Among Worst Stock-Based Compensation Offenders"},"content":{"rendered":"

Genius Sports (NYSE:GENI) and DraftKings (NASDAQ:DKNG) are the worst offenders in terms of equity-based compensation as a percentage of 2021 gross profits.<\/p>\n

\"stock-based
Inside DraftKings’ Boston office. The company and Genius Sports dole out large amounts of stock-based compensation. (Image: Wall Street Journal)<\/em><\/figcaption><\/figure>\n

That\u2019s according to a list<\/a> constructed by Twitter user JiggyCapital. By his data, sports betting data provider Genius\u2019s stock-based compensation as a percentage of 2021 gross profits was an astounding 789%. That’s while the tally for DraftKings was 136%. The companies\u2019 stock-based pay as a percentage of 2021 operating income was -89% and -44%, respectively.<\/p>\n

\n

Stock-based compensation, also known as equity-based or share-based compensation, is common among publicly traded companies. It is frequently used by young, unprofitable growth companies that may want to conserve capital directed toward employees\u2019 cash salaries. In 2021, the median salary for a DraftKings staffer was $102,098, while CEO Jason Robins garnered 137 times that amount<\/a>.<\/p>\n<\/div>\n

Broadly speaking, the investment community doesn\u2019t decry stock-based compensation, particularly among youthful tech companies, because the fight to attract and retain talent is ultra-competitive. However, there times when this way of rewarding employees draws scrutiny.<\/p>\n

Why It Matters for DraftKings, Genius<\/h2>\n

While lavishing stock upon workers conserves cash, the strategy still has balance sheet implications because the expense is added back to derive a company\u2019s cash flow. By adding it back, a company\u2019s shares outstanding count increases.<\/p>\n

Challenges and issues with equity remuneration include: Dilutes the ownership of existing shareholders (by increasing the number of shares outstanding) (and it) may not be useful for recruiting or retaining employees if the share price is decreasing,\u201d<\/strong> according to the<\/a> Corporate Finance Institute.<\/p><\/blockquote>\n

In the cases of DraftKings and Genius Sports, both of which came to market via mergers with special purpose acquisition companies (SPACs), share prices are in free fall<\/a>. Over the past year, the online sportsbook operator lost 71.38 percent of its value, while Genius shares are lower by 70.68 percent.<\/p>\n

At a staggering 20,742 percent, Genius is also the worst offender in terms of stock compensation as a percentage of earnings before interest, taxes, depreciation and amortization (EBITDA), notes JiggyCapital. DraftKings isn\u2019t among the top 25 on that dubious list.<\/strong><\/p>\n

Margins Matter, Too<\/h2>\n

With analysts and investors increasingly scrutinizing time lines to profitability<\/a> for sports betting stocks, expanding shares outstanding counts don\u2019t help matters when it comes to per share earnings.<\/p>\n

Some companies in this group are also dealing with margin issues. For example, DraftKings\u2019 gross margins declined 42.9% from 2019 through 2021. On the other hand, Genius Sports\u2019 gross margins jumped almost 24% over that period — good for one of the best increases.<\/strong><\/p>\n

DraftKings and Genius are the only gaming equities to appear on any of the lists mentioned here.<\/p>\n","protected":false},"excerpt":{"rendered":"

Genius Sports (NYSE:GENI) and DraftKings (NASDAQ:DKNG) are the worst offenders in terms of equity-based compensation as a percentage of 2021 gross profits. That\u2019s according to a list constructed by Twitter user JiggyCapital. By his data, sports betting data provider Genius\u2019s stock-based compensation as a percentage of 2021 gross profits was an astounding 789%. That’s while […]<\/p>\n","protected":false},"author":46,"featured_media":206982,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,33810],"tags":[],"acf":[],"yoast_head":"\nDraftKings, Genius Sports Big In Stock-Based Compensation<\/title>\n<meta name=\"description\" content=\"DraftKings, Genius Sports deliver large amounts of stock-based compensation.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/draftkings-genius-sports-big-in-stock-based-compensation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"DraftKings, Genius Sports Big In Stock-Based Compensation\" \/>\n<meta property=\"og:description\" content=\"DraftKings, Genius Sports deliver large amounts of stock-based compensation.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/draftkings-genius-sports-big-in-stock-based-compensation\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-03-28T20:21:41+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-03-23T01:46:08+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/DKNG.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"640\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-genius-sports-big-in-stock-based-compensation\/\",\"url\":\"https:\/\/www.casino.org\/news\/draftkings-genius-sports-big-in-stock-based-compensation\/\",\"name\":\"DraftKings, Genius Sports Big In Stock-Based Compensation\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-genius-sports-big-in-stock-based-compensation\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-genius-sports-big-in-stock-based-compensation\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/DKNG.jpg\",\"datePublished\":\"2022-03-28T20:21:41+00:00\",\"dateModified\":\"2023-03-23T01:46:08+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"DraftKings, Genius Sports deliver large amounts of stock-based compensation.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-genius-sports-big-in-stock-based-compensation\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/draftkings-genius-sports-big-in-stock-based-compensation\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-genius-sports-big-in-stock-based-compensation\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/DKNG.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/03\/DKNG.jpg\",\"width\":1280,\"height\":640,\"caption\":\"Inside DraftKings' Boston office. 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