As sports-betting legalization spreads crossed U.S. states, DraftKings (DKNG) is astatine the forefront of the online betting industry. Amid a immense determination since its April 2020 debut, is DKNG banal a buy?
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The expanding legalization of integer sports betting is an emerging trend. The November predetermination results showed voters successful respective states mostly approved ballot measures that legalized sports betting and different gaming enlargement measures.
Boston, Mass.-headquartered DraftKings is primed to instrumentality vantage of this burgeoning displacement successful authorities attitudes toward sports betting. DraftKings is an online sports level that allows users to play regular phantasy games and triumph currency prizes.
DraftKings is connected the roadworthy to profitability. After losing $3.95 a stock successful 2020, the institution is expected to suffer $3.59 per stock successful 2021 and $2.32 per stock successful 2022, according to IBD data.
DraftKings Stock Fundamental Analysis: Strong Revenue Growth
On Nov. 5, DraftKings missed Q3 net and gross targets. The institution mislaid an adjusted $1.35 per stock connected gross of $212.8 million. Meanwhile, absorption boosted the midpoint of its gross guidance for fiscal 2021 to $1.26 cardinal vs. the erstwhile midpoint of $1.25 billion. Analysts person projected $1.29 billion. The institution sees gross betwixt $1.7 cardinal and $1.9 cardinal for fiscal 2022.
CFO Jason Park said successful a connection that gross would person been $40 cardinal higher if not for "lower-than-expected clasp chiefly owed to unexpected NFL games outcomes."
DraftKings IBD Stock Ratings
As a effect of the company's deficiency of profitability, DraftKings' EPS Rating is simply a anemic 24 retired of a best-possible 99. The EPS Rating measures a company's quality to turn profits twelvemonth implicit year, utilizing the astir caller 2 quarters and the past 3 to 5 years of net growth.
According to the IBD Stock Checkup, DKNG stock shows a anemic 9 retired of a cleanable 99 IBD Composite Rating. The Composite Rating helps investors easy measurement a stock's cardinal and method metrics.
DraftKings Stock News
On Jan. 26, DraftKings surged implicit 5% aft Goldman Sachs upgraded DKNG banal from neutral to buy, portion raising the terms people from 45 to 65. Meanwhile, Bernstein started sum with an outperform standing and a 71 terms target.
According to Goldman expert Stephen Grambling, "We upgrade DKNG to Buy arsenic we expect ongoing income beats versus statement driven by 1) sustained marketplace starring presumption successful caller and existing markets, 2) quality to enactment successful the economics of azygous relation states, and 3) beingness of nationalist partnerships that should let them to accelerate maturation and execute standard sooner than the broader adjacent group."
On Feb. 8, Ark Invest added 502,400 full shares successful its portfolio of ETFs. On Feb. 1, Cathie Wood's Ark Invest disclosed a caller presumption of 620,300 shares connected Feb. 1 for the ARK Next Generation Internet ETF (ARKW).
On March 4, DraftKings announced a woody with the UFC to beryllium its authoritative sportsbook and "daily phantasy partner" successful the U.S. and Canada.
On April 15, DraftKings and the National Football League said that the sports amusement and gaming institution volition go an NFL authoritative sports betting partner. The NFL and DraftKings besides said that DraftKings' narration arsenic the NFL's exclusive authoritative regular phantasy spouse volition beryllium extended.
On June 15, abbreviated seller Hindenburg Research published a bearish study connected the stock. The report claims that a DraftKings subsidiary has ties to organized crime.
On August 9, DraftKings reached an agreement to buy Golden Nugget Online (GNOG) successful an all-stock transaction worthy astir $1.56 billion.
On Oct. 26, DraftKings declined to marque a steadfast offer for sports betting elephantine Entain.
On Nov. 4, the National Basketball Association announced an expanded multiyear narration to marque DraftKings a co-official sports betting spouse of the league. This statement grants DraftKings expansive NBA rights and assets to integrate wrong its sports betting, regular phantasy sports, iGaming and free-to-play products and promotional offerings.
DKNG Stock Technical Analysis
On April 24 past year, DraftKings banal broke retired supra a 19.60 bargain constituent successful a cup base. Shares precocious arsenic overmuch arsenic 128% from the bargain constituent earlier the enactment of the adjacent base.
After a 38% decline, the banal formed the close broadside of a cupful basal featuring a 44.89 bargain point. DraftKings broke retired connected Sept. 14, 2020 and rapidly roseate arsenic overmuch arsenic 43%. But the banal couldn't clasp its lofty gains and they dissipated implicit the adjacent fewer weeks. DKNG banal gave up the entirety of a double-digit summation from a erstwhile 56.08 bargain constituent successful a cupful with handle, according to IBD MarketSmith illustration analysis.
Following a round-trip merchantability signal, shares are consolidating sharply beneath their 10-week moving mean enactment and their semipermanent 40-week line. There is nary caller bargain constituent owed to the stock's caller weakness. Shares are implicit 60% disconnected their 52-week high.
Is DKNG Stock A Buy Right Now?
DKNG banal slid implicit 5% Monday. The banal is conscionable disconnected its 52-week low, which was acceptable connected Dec. 3 astatine 27.48.
DraftKings stock is simply a promising semipermanent imaginable successful the sports-betting industry, and the company's imaginable is encouraging. Despite a deficiency of earnings, the institution has immense gross maturation and is 1 of the leaders successful the online betting megatrend. Wait for DKNG banal to interruption retired past a caller bargain point. Since the banal is much than 60% disconnected its 52-week precocious and not astatine a caller bargain point, it is not a bargain close now.
For much starring stocks and stocks approaching bargain points, cheque retired these IBD Stock Lists, similar the Stocks Near Buy Zones. To spot the existent banal marketplace trend, cheque retired IBD's signature regular analysis, The Big Picture.
Be definite to travel Scott Lehtonen connected Twitter at @IBD_SLehtonen for much connected maturation stocks and the banal market.
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