The last time I weighed in on DraftKings (NASDAQ:DKNG) stock, I said, “At $52.72, DKNG is still cheap, and could at least double from here on explosive catalysts.”
Shortly after, the stock would hit a high of $63.78 before plummeting to $34.39. All thanks to pandemic pressure, and news the company sold 32 million shares at $52. However, the stock has managed to climb back to $50, where we again see big opportunity.
From here, I’d like to see DKNG retest $63.78, and race to $100 share on several catalysts.
More U.S. States Could Allow Mobile Betting
New York could soon allow statewide mobile betting, benefiting DKNG stock.
In fact, Loop Capital analyst Daniel Adam noted that sports betting in the state, “is definitely on the table, but it might not happen by the end of this year.”
At the same time, according to Investor’s Business Daily’s Adelia Cellini Linecker, New York Assemblyman Gary Pretlow said he had a commitment from Assembly Speaker Carl Heastie to include mobile sports betting in a revenue bill. In addition, “New York Gov. Andrew Cuomo is said to be ready to include online gambling legislation in the next revenue bill.”
Better still, the company just launched mobile sports betting in Illinois and iGaming in West Virginia. In fact, after a launch in Tennessee, the company now has mobile sports betting in 10 states, which represents 20% of the U.S. population, according to the company.
DraftKings Continues to Sign Big Deals
The last time I spoke about DKNG stock, I noted the company had just signed a deal with Disney’s (NYSE:DIS) ESPN that would allow it to become a “co-exclusive Sportsbook link-out provider and exclusive daily fantasy sports provider of the media giant.”
Since then, it signed deals with:
- Major League Baseball’s Colorado Rockies, the NBA’s Detroit Pistons and the NHL’s Nashville Predators and Philadelphia Flyers, which will make DraftKings an official daily fantasy sports operator and official sports betting operator.
- Turner Sports, which makes DraftKings the exclusive sportsbook and daily fantasy sports provider across select Turner Sports and Bleacher Report properties.
- The Mike Tyson v. Roy Jones Jr. bout, where it was recognized as “the official sports betting partner.”
From here, I’m sure we’ll see plenty more deals, and more upside in the stock, as a result.
Analysts seem to like DKNG, too. In fact, Daniel Adam recently initiated coverage with a buy rating and a $100 price target. “Bottom line: We believe DKNG will emerge the clear share leader in online gaming given its powerful brand, early mover advantage and digital-first DNA,” he wrote in a note.
DraftKings Earnings Were Generally Positive
On Nov. 13, the company posted a loss of 57 cents on sales of about $133 million. This was still better than expectations for a loss of 61 cents on sales of $131 million. A year ago, the company produced $67 million in sales. All thanks to the return of delayed sports.
“The resumption of major sports such as the NBA, MLB and the NHL in the third quarter, as well as the start of the NFL season, generated tremendous customer engagement,” said Jason Robins, DraftKings’ co-founder, CEO and chairman.
It also raised its fiscal year 2020 pro forma revenue guidance from a range of $500 million to $540 million to a new range of $540 million to $560 million. That’s good for growth of between 25% and 30%, even with the pandemic still causing chaos. Revenue guidance for next year of $750 million to $850 million is good for 45% year over year growth.
Global Online Gambling Could Reach $92.9 Billion by 2023
According to Statista, the global online gambling market could be worth up to $92.9 billion over the next three years alone from $59 billion today.
That’s thanks in part to the pandemic lockdowns, the wealth of casinos that can now be accessed on millions of smartphones, and a greater increase in Internet penetration. With all of these catalysts, I strongly believe DKNG stock could be a $100 stock soon.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.