After a 74% drop, it’s a great time to buy DraftKings stock

  • DraftKings sold out this year
  • DKNG shares are down 30% year-to-date and 74.2% below their all-time high
  • The stock offers an attractive opportunity at an attractive price

DraftKings (NASDAQ:), which is widely regarded as the leader in online sports betting, saw its shares tumble due to a powerful combination of growing, accelerating and slowing economic growth that sparked a sell-off in non-tech companies. profitable.

Even though DKNG stock remains down 30% year-to-date, the stock has had an impressive rally since dropping to an all-time high of $9.77 on May 12.

At current valuations, the Boston-based digital sports gaming and entertainment company has a market capitalization of $8.6 billion.

DraftKings shares have seen a turnaround since the company delivered which has eased investor concerns about its long-term prospects.

Drafting earnings

Not only did it beat estimates on several key metrics, it increased its forecast for the full year.

“Customer engagement remains strong and we continue to see no discernible impact from broader macroeconomic pressures,” CEO Jason Robins said.

The average monthly number of unique paying customers of DraftKings has increased by 30% over the past year to 1.5 million. Average revenue per paying user jumped to $103, also a 30% increase over the same period last year.

Several positives

  • NFL betting season kicks off

The start of the National Football League (NFL) tends to be the best time of year for DraftKings. The 2022 NFL season is expected to see a record number of Americans placing bets on football games, according to the American Gaming Association.

NFL sports betting

Sports betting is currently legal in 36 states and Washington, DC, the association said. 18 of the 22 states that have NFL teams have legalized sports betting.

  • DraftKings and Amazon team up for “TNF” football

DraftKings will be the exclusive provider of pre-game and in-play betting odds for Amazon’s (NASDAQ) NFL “Thursday Night Football” (TNF) shows streaming only on Prime Video this season.

The sportsbook operator announced on Tuesday that it has signed a multi-year deal with Amazon that also includes same-game parlays that will be available on the DraftKings app. As part of the agreement, content from DraftKings, including additional sports betting information, will be featured in all 15 TNF games.

This should bode well for the spirit of the online gambling specialist, which is directly correlated to the development of positive consumer awareness and popularity.

“We look forward to working with Amazon to provide millions of viewers with a premium and enhanced experience during TNF on Prime Video throughout the season and for years to come,” said DraftKings Chief Marketing Officer Stephanie Sherman.

Amazon paid the NFL $13 billion for exclusive broadcast rights to TNF games through 2033.

There has long been speculation as to whether Amazon could potentially enter the online sports betting space via an acquisition and this link ups those odds.

  • Cathie Wood keeps loading

Cathie Wood, founder, CEO and CIO of Ark Invest, is betting big on DraftKings. Wood, who made a name for himself as a growth investing legend in 2020, has significantly strengthened his position in the online gaming and fantasy sports specialist since early September. It made 13 stock purchases this month, adding 582,122 shares to Ark’s exchange-traded fund (ETF) suite.

Its flagships ARK Innovation ETF (NYSE:) and ARK Next Generation Internet ETF (NYSE:) saw the biggest buys of the month so far.

ARK ETF Holdings

DKNG stock currently represents 2.58% of ARK ETFs’ total assets and is currently the fund’s 14th largest holding, overtaking Shopify (NYSE:), Roblox (NYSE:) and Robinhood (NASDAQ:) in recent weeks. .

Overall, Wood currently owns 22.4 million DKNG shares, bringing his stake to 4.88%. I expect the sportsbook company to move up the list in the coming months given the size and persistence of Wood’s buying activity.

Wall Street has a long-term bullish view on the stock, with all 31 analysts polled by invest.com calling it a “buy” or a “hold” with around 43% upside potential.

Draftkings Consensus Perspectives
Draftkings Consensus Perspectives

Roth Capital Partners raised its rating to “buy” last month and raised the 12-month price target to $25 from $18. Analyst Edward Engel points to DraftKings’ app growth as a path to profitability. Citi’s Jason Bazinet also raised his price target to $24 from $20 and reiterated a “buy” rating. “We continue to view DKNG as a leading operator in the growing US betting market,” he wrote in a research note. And Morgan Stanley’s Ed Young maintained his buy rating, saying the company was making progress in cutting its losses as more states legalized sports betting.

Conclusion

The dramatic sell-off in stock earlier this year, combined with the start of the NFL football season earlier this month and the NBA basketball season soon to begin, means now is the time. great for owning DraftKings.

Disclosure: At the time of writing, Jesse didn’t position in any title mentioned. The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.