DraftKings Stock Is a Safe Bet In 2021

DraftKings (NASDAQ:DKNG) is an online sports betting platform that allows users to play daily fantasy games and win cash prizes. With sports-betting legalization increasing across the U.S., DKNG stock has enjoyed plenty of attention. It’s quickly becoming a king in this space after making several strong moves over the past year.

DraftKings (DKNG) logo on a phone
Source: Lori Butcher / Shutterstock.com

Put another way, the company is on the road towards success and profitability. And that’s largely why it belongs on your radar.

But let’s take an deeper look at what makes it a hot investment. DKNG stock has taken a dip recently, but it’s not all doom and gloom.

Strong Market Outlook

According to a report from Research and Markets, the global gambling market will grow at a CAGR of 4% by 2023, with revenues exceeding $525 billion. 

The market is driven by the increasing penetration of online gaming across America and Europe. With the high adoption of the internet, increasing interest in digital platforms and the general convenience of betting on mobile and PCs, there’s plenty of room for the global market to transform. When it comes to DraftKings in particular, the company used the challenges caused by the novel coronavirus pandemic as an opportunity to expand into different markets and attract a large number of users to its platform. 

But when determining whether DKNG stock is a worthy investment, we also need to consider the company’s fundamentals. With DraftKings, revenue is rising consistently. For example, the company saw a 98% year-over-year increase, after reporting $132.8 million in revenue in Q3. In its revenue guidance, DraftKings mentioned a revenue forecast of $750 million to $850 million. That’s huge potential year-over-year growth.

It also reported a rise of 64% in the monthly payers to more than 1 million, showing the increasing confidence of users and efficiency in data-driven sales.

The strength the company has demonstrated so far helps bolster the long-term case for DKNG stock. Despite the lack of earnings, there is huge growth in revenue and it is one of the top players in the increasingly popular online betting segment.

DKNG Stock Is a Buy Right Now

We still can’t expect to return to spectator-filled sports stadiums any time soon. And legislators in many states are looking to legalize sports betting. Given these positives, the stock could hit new highs anytime this month. 

The company is also making the right partnership moves. In September, DraftKings announced Michael Jordon will be joining the company’s board of directors. Further, in mid-September, the company entered into an agreement with Disney’s (NYSE:DIS) ESPN to be the “co-exclusive sportsbook link-out provider” and its “exclusive daily fantasy sports provider.”

To cash in on the holiday season, the company introduced gift cards — a unique offering in the industry. Moves like this will help put it ahead of its competitors. 

In January, the company signed a deal with Drone Racing League as an official sports betting partner. DRL drone races have become the first aerial sporting event where fans can wager. To catch the attention of users, DraftKings introduced the races to customers as a free-to-play pool and it saw a 30% boost in entries during its debut week, with total entries exceeding 150,000.

Meanwhile, New York Governor Andrew Cuomo issued a statement that he may consider legalizing online sports betting in New York and this has raised hopes for the company. The company already operates daily fantasy sports in New York but not online sportsbooks. Hence, people who want to place sports bets have to do from a casino that is shut due to Covid-19. If all goes well, DKNG will see a significant rise in the number of its users.

Ultimately, DKNG stock has nowhere to go but up. Due to current restrictions and Covid-19, gambling may become a primarily online event. As more states look into legalization, the market is going to grow in 2021. Even if we do not consider other states for the legalization of online betting, DKNG has a strong market. And it is building partnerships that broaden its appeal across the country.

Any dip in DKNG stock is a strong buying opportunity. 

On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Article printed from InvestorPlace Media, https://investorplace.com/2021/01/draftkings-dkng-stock-is-a-safe-bet-in-2021/.

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