How You Could Double Your Money at Least 6 TIMES This Year

On May 19, iconic growth investor Louis Navellier will reveal how his powerful quant-based stock system could accelerate your wealth and help fund your retirement.

Wed, May 19 at 4:00PM ET

Volatile DraftKings Stock Is Still Well-Poised For Success

As industries try to get a foothold in a market that was reeling just a couple of months ago, one company that has weathered the storm with ease is DraftKings (NASDAQ:DKNG). DraftKings stock began trading on Nasdaq composite in April and has now has a market cap of nearly $13 billion.

If You Think DraftKings Stock Is Hot Now, Wait Until Sports Is Back
Source: Lori Butcher/

DraftKings provides a sliver of hope for investors in an otherwise volatile market. The company hopes to continue on this upward trajectory despite the recent announcements that have created some short-term volatility for its stock price.

Nevertheless, the verdict on this stock still remains to buy and hold.

Investors Cash Out On DKNG’s Success

On June 16, DraftKings announced that it would release 33 million shares to the public. This will include 14 million Class A shares and 19 million redistributed shares. Many top executives such as New York Knicks owner James Dolan and Dallas Cowboys owner Jerry Jones, are expected to sell their shares in the company as part of the offering.

The goal behind the sale of new DraftKings shares is to raise capital for growth and expansion in the market. The company successfully went public when it merged with Diamond Eagle Acquisition Corp. in April. Since then, the DraftKings stock price mostly swung between $17 and $20 per share. However, the company still has a long way to go if it hopes to create a strong niche in the competitive world of sports betting.

After all, the company faces fierce competition from gaming giants such as Flutter that recently raised $1 billion for expansion in the U.S. market.

DraftKings’ strong debut came as a surprise to many investors, thank to the landscape shift in entertainment thank to the novel coronavirus. As concerns over transmission of the disease rose, sports of all levels began cancelling games — and then seasons — out of caution. With major sports off the air, there is little to no sports betting activity in the U.S.

When the sale of shares was announced, investors’ reaction to the news of the was less than enthusiastic. DraftKings stock declined by 6% in the after-market hours when the announcement was made. It’s not surprising — the sale of equity will lower the value of shares for current stockholders.

Online Gaming Revenue Hits The Jackpot

With major sports off the air, many bettors have turned to online gaming sites and casinos. In New Jersey, internet gambling revenues rose 124% in May. DraftKings is well-poised to benefit from this trend, as the company has a strong presence in online gaming communities in New Jersey and other states.

So, surprisingly, the sports-betting giant has been fairly immune to the effects of the coronavirus and even saw a 30% increase in its revenue. The company shifted its focus more to betting on e-sports, a strategic move that also embraces that fast-growing niche. It also made some big gains via a recent UFC match. As more states continue to legalize sports betting, DraftKings can make some serious power moves in this space.

Once sporting events are back to regularly scheduled programming, DraftKings is likely to exceed its revenue expectations if they can successfully gain a majority share of the sports betting market, on and off-air.

Place Your Bets On DraftKings Stock

As companies begin to emerge from the pandemic, DraftKings stock shows some major upside potential. The company continues to become stronger in local markets with room to grow as more states legalize sports betting. In states like New Jersey, the company holds a strong position in the market.

Although DraftKings’ stock price is on the higher side at around $41 per share as of this writing, their strong financials make it a worthwhile investment. The company reported 720,204 players on their app this quarter that resulted in $88.5 million in revenue. As DraftKings raises more capital through the sale of shares, the sky’s the limit for the company in the competitive world of sports betting.

Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for Investor Place since 2020. As of this writing, Divya Premkumar did not own any of the aforementioned stocks.

Article printed from InvestorPlace Media,

©2021 InvestorPlace Media, LLC