The meteoric rise of DraftKings stock has captured the attention of investors and market analysts. With a remarkable 167% rally attributed to the booming sports betting industry, DraftKings is now tantalizingly close to triggering a new buy signal.
The Key Entry Points:
- Trendline Entry: DraftKings stock is flirting with an entry point above its 50-day moving average.
- Trigger Point: Consider using Wednesday’s high of $31.10 as a trigger.
- Official Buy Point: The official buy point stands at $34.49, with an alternative early entry at $32.65.
The Upward Trajectory: DraftKings has been on an upward trajectory as the sports betting landscape undergoes a significant transformation. Legalized sports betting is now available in 38 states and Washington, D.C., a notable increase from the 30 jurisdictions in 2021. Furthermore, the U.S. sportsbook industry experienced a staggering 75% revenue increase in 2022, reaching a record-breaking $7.5 billion, with Americans wagering an impressive $93.2 billion on sports throughout the year.
DraftKings currently operates in 24 states where sports betting is legal, extending its reach to Ontario, Canada, and Puerto Rico after the launch of its mobile sportsbook in Kentucky in late September.
Market Access Agreements: In August, DraftKings secured a market access agreement with ECL Corbin, a subsidiary of ECL Entertainment, facilitating its presence in the Mint Gaming Hall at Cumberland and Cumberland Run. The company has also opened retail sportsbooks at both properties.
Diverse Product Portfolio: DraftKings’ product portfolio is diverse and expansive, with daily fantasy sports available in 44 states, certain Canadian provinces, and the U.K. In addition, the company’s iGaming product is operational in five states and Ontario under the DraftKings brand, and in four states under its Golden Nugget Online Gaming brand.
Expanding Userbase: DraftKings has witnessed an explosive growth in its userbase. Monthly unique players (MPUs) surged by 44%, reaching 2.1 million customers during Q2 earnings. The company’s revenue also recorded an 88% increase, reaching $875 million, marking the second consecutive quarter of accelerated top-line growth.
Positive Outlook: The company has raised its guidance, expecting a potential 58% revenue growth for the year. FactSet analysts project an improvement in full-year earnings per share, moving from an adjusted loss of $1.53 in 2022 to a loss of $1.09. Revenue is anticipated to increase by 57%, reaching $3.53 billion.
Analyst Views: JPMorgan upgraded DraftKings stock to an overweight rating, raising its price target to $36 from $26. Analyst Joseph Greff sees the gambling sector as appealing, with promising same-store and new market growth prospects. Greff also believes that DraftKings has a strong competitive advantage in the industry.
Further supporting the positive sentiment, Argus predicts DraftKings’ revenue to surge to $3.2 billion in 2023 from $2.2 billion in 2022 due to the expansion of online legal sports betting. They maintain a buy rating and a price target of $34 on DraftKings stock.
Cathie Wood’s Position: Cathie Wood’s ARK Invest management firm has been actively trading DraftKings shares. Despite selling a substantial number of shares, they still hold a significant position in DraftKings within various ETFs, reflecting their ongoing confidence in the company’s potential.
Investor Considerations: DraftKings stock is currently in a consolidation phase with an official buy point at $34.49. While it faced some challenges in August, including the ESPN-Penn alliance, it has made a recovery. The stock recently regained its 50-day moving average, and investors could use $31.10 and $32.65 as potential entry points.
In summary, DraftKings’ stock is showing resilience and promise as it rides the wave of the expanding sports betting industry. Its growing userbase and optimistic financial outlook suggest it could be an enticing opportunity for investors.
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