DraftKings today
(As of 12/23/2024 5:45 PM ET)
- 52 week range
- $28.69
▼
$49.57
- Target price
- $51.00
Provider of digital sports betting and iGaming applications DraftKings Inc. NASDAQ: DKNG was in hypergrowth mode until 2024, but continues to lose money and even issued a contraction forecast for 2024. The company, along with competitor FanDuel, owned Flutter Entertainment plc NEW YORK CITY: FLOODINGfaces further scrutiny of anti-competitive practices. US Senators Peter Welch and Mike Lee want the US Federal Trade Commission (FTC) to investigate as they claim two computer and technology companies control nearly 90% of the online betting market in the United States.
This has seen the stock fall for seven straight sessions to the daily fixed VWAP support level of $39.56. Here are five reasons for bullish investors who were waiting for a pullback to bet on DraftKings in 2025.
1) DraftKings continues to grow revenue at double-digit pace
DraftKings’ growth is still ongoing, as evidenced by revenue growth of 39% YoY in the third quarter to $1.1 billion. The company increased its monthly unique payers (MUP) by 55% to 3.6 million. DraftKings is the third largest sports betting platform in the United States. The third quarter marked the return of NFL and college football betting season. Revenue growth was driven by strong customer acquisition, strong customer engagement, expansion into new jurisdictions, high retention rates, and the acquisition of Jackpocket Inc., an application that allows users to purchase lottery tickets on their mobile devices.
Jackpocket users can select their games and numbers that Jackpocket runs and scan their order confirmation ticket. Tickets are stored securely in a fireproof safe. Prizes valued at less than $600 are credited to the user’s Jackpocket account, while for larger winnings a ticket is delivered to the user. Jackpocket charges a fee of 7% to 10% on transactions as the user keeps all winnings. Jackpocket also offers live dealer games and digital casinos.
2) DraftKings will benefit from the ongoing legalization of online sports betting
Online sports betting is proving to be an effective way for states to generate tax revenue. As of December 21, 2024, DraftKings is currently legal and resides in 26 states (technically, 25 states and the District of Columbia) and Ontario, Canada. This represents 49% of the US population and 40% of the Canadian population. It also offers in-person betting in 14 states. DraftKings offers betting on horse racing in 20 states. Missouri was the last state to legalize sports betting on November 5, 2024, and DraftKings plans to launch the process in 2025 pending regulatory approval.
Expectations for high results in new states legalizing sports betting and online gaming. California is the largest potential market for legalized online sports betting. However, it faces significant opposition from tribal casinos. A previous attempt at legalization through Proposition 27 failed in 2022. Texas is the second largest potential market, but an attempt was made in 2023 that was rejected. Florida, Georgia and Minnesota are the next biggest potential markets for DraftKings.
3) Legalization of iGaming – growth driver
iGaming is a term used to refer to online gambling at online casinos, which can include a variety of slot machines, keno, digital and table games such as blackjack, poker and roulette. DraftKings only works in five states, including Ontario and Canada with its iGaming platform. Although DraftKings does not list specific states, iGaming margins are much higher (70% to 90%) than sports betting margins (5% to 10%). This is because the casino always has an edge built into the casino games, as well as a higher frequency of digital games. In contrast, sports betting only offers the “vig,” also called a hold, that DraftKings receives for facilitating bets.
5) DKNG stock is trying to break out of the MSL descending triangle pattern
A descending triangle is typically a bearish chart indicator with lower highs bouncing off flat bottom support. The descending upper trend line converges with the flat lower horizontal support line of the lower trend line at the top point. A breakout is triggered if the stock falls below the lower support of the trend line. A breakout occurs if the stock rises above the upper resistance line.
A market structure low (MSL) buy signal is triggered above the high of a candle with a higher low after the formation of three candles consisting of a low, a lower low, and a higher low.
After forming a swing high at $45.87, DKNG continued to form ten consecutive lower low candles before a green higher low candle formed above the daily pinned VWAP at $39.56. The high-low candle high is $40.62, which also serves as a buy signal for MSL. A descending triangle breakout could occur if DKNG is able to rise to the $40.62 level. The daily RSI is slowly rising through the 42-bar, potentially gaining momentum. Fibonacci (Fibonacci retracement support levels are at $88.22, $84.35, $76.99 and $73.06.
DKNG’s average target price is $51.00which implies a growth potential of 26.39%. and his highest analyst price target is at US$62. The company has a Buy rating from 23 analysts and a Hold rating from three. The stock’s short interest is 2.23%.
Actionable Option Strategies: Bullish investors may consider using cash-backed puts at Fibonacci retracement support levels to buy the dip. If the stock is allocated, then writing covered calls at high Fibonacci levels implements a wheel strategy for income opportunities while hedging the downside with premiums received.
You’ll want to hear this before you consider DraftKings.
MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and DraftKings wasn’t on the list.
While DraftKings currently has a Moderate Buy rating among analysts, the top-rated analysts consider these five stocks to be Strong Buys.
View five stocks here
Do you expect global energy demand to decline?! If not, then it’s time to take a look at what role energy stocks can play in your portfolio.
Get this free report