Draftkings (NASDAQ: DKNG) is making a name for itself in the betting and investment world. While most stocks are falling off a cliff during the pandemic Draftkings continues to grow with little interruption. Mainly because of their market foothold in the growing online gambling space (sports, casino, and e-sports). However, with the NASDAQ steaming full speed ahead some investors wonder whether it needs to take a break and if a pullback is due. Thus, we will provide our readers with an objective opinion as to whether an investment in DKNG holds any value.
Table of contents 1. Draftkings launch new online casino app 2. Sports events are still under threat - should DKNG investors worry? 3. Does YIG see potential in an investment?
Draftkings surge off a new casino app
The gambling space is shifting from the physical scene to the online area. Poker tables, slot machines, betting on horses at the races, and your local sports teams are virtually all available online now. However, the rapid shift causes some companies to emerge, market leaders. In contrast, others are getting left by the side of the road.
Proactive betting companies are aggressively growing their online presence. For example, Draftkings launched its new casino app last week. The app is only available on iOS. However, the introduction of a casino app should bolster DKNG’s revenue for FY2021. Investors instantly reactively positively to the news, driving DKNG up 20%. However, the main question is, will Draftkings be a name closely linked with the online casino space? Because the competition is cut-throat as each new betting company fights for the throne. Nonetheless, the announcement of DKNG’s casino app was enough to get the bulls rolling for now.
Sports are still under threat – should DKNG investors worry?
While the industry might be shifting to the virtual world, sports betting and horseracing still need the events to take place. Lockdowns saw sports come to a standstill, which threatened some sport betting companies’ revenue, such as Draftkings. However, sports are slowly coming back which means more U.S. states should begin launching their new gambling industries.
For example, Illinois’ legal sports gambling industry is set to steam in the upcoming weeks to months. Draftkings, along with FanDuel, received a temporary betting permit from the Illinois Gaming Board. This permit could see DKNG enter the Illinois market this weekend, when the baseball season begins. Moreover, it is likely Illinois “will have a variety of online and mobile betting options before the start of the NFL season“. Thus, the lifting of restrictions is allowing Draftkings to cement its foothold in the emerging markets further. Ultimately, increasing their potential revenue for FY2021.
Thus, DKNG should continue its mighty expansion across the U.S. Still, investors should take note that the introduction of new lockdowns could cause the stock to dip.
Does YIG see value in a DKNG investment?
Before I begin, I am obliged to remind our viewers that this is not financial advice but rather financial commentary from extensive research in the field
Short answer: A Draftkings investment could potentially pay-off but do not allow the extreme bullish activity to cloud your judgement (opinion not advice)
Draftkings is more than just a betting company. DKNG could potentially be the future industry captain of the online gambling industry. (opinion not advice) It is this hopeful future that is driving the stock price to extreme highs. Draftkings is targeting every corner of the market from e-sports to the online casino, and sports betting. Ultimately, screaming strong future revenue growth.
Also, DraftKings is changing their business model to suit the current climate better. They are streaming sports live, like table tennis, so users can watch and bet at the same time. Draftkings is also creating simulated NFL games with madden technology, for EA betters. Overall, people are hungry for sports, and DKNG is satisfying our appetite through the online space.
Growth aside what are the risks
However, you should not let the euphoria convince you to invest. Thus, it would not be wise to invest in bodacious call options as DKNG could still decline. Because if the current macroeconomic issues catch up to market, then DKNG would likely pullback. If DKNG does plummet, it could a great time to snap up shares. Because once the real bull run returns DKNG should be roaring again.
The world is in a recession, yet investors are buying stocks like it is the middle of a bull run. Not to mention the NASDAQ could be turning into a bubble. Thus, YIG does believe a DKNG investment holds value but wishes to expose the potential shortcomings so that our viewers can make an informed decision.
Here is our free, uncomplicated, and extensive ASX portfolio
Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?
If you aren’t already subscribed to us, you can subscribe for free via email below and get updates when we post new articles and stock market news. From all of us at YIG, thank you for the support.
The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick McLoughlin, Senior Manager of YIG.