The online gaming market has remained at the forefront of the pandemic. With the legalization of online sports betting across different States, DraftKings (NASDAQ:DKNG) stock has had a wonderful start to the year.
DraftKings hit an all-time high of $74 in March 2021 and has slipped to the current level of $59 over the last few weeks.
There is a jump in the total addressable market in the U.S. that has led to an increase in revenue expectations for 2021 with a wider market share. DKNG stock is a screaming buy on the recent pullback. Over the past week, the stock has moved from $63 to $59, which offers a great buying opportunity. DKNG stock is ready for a rebound and it could hit a new high in the coming weeks.
Let’s dig deeper into what’s making the stock soar.
Huge Potential in the New York Gaming Market
New York approved an online sports betting model backed by Gov. Andrew Cuomo. As per the plan, the New York Lottery will issue requests for proposals from two mobile betting operators who will then subcontract to four sportsbook operators. They hope to launch online sports betting by Sept this year. There are chances that the state budget may have a provision for mobile betting.
This model is set to benefit DraftKings, which will bid for one of the licenses. This move can lead to the generation of revenue and an increase in the customer base for the company. It is expected that online wagering will make up about 90% of the betting handle in New York. This industry could soon top billions of dollars and benefit DraftKings.
Right Moves at the Right Time
DraftKings is making well-timed moves to enhance customer acquisition. The company entered into a deal with World Wrestling Entertainment (NYSE:WWE) to be an official gaming partner. Once the regulatory approvals are cleared, DKNG will receive an exclusive license to media assets and branding for WWE events.
Recently, the company announced the acquisition of BlueRibbon Software, a gamification and global jackpot company. Details about the deal are not disclosed. It is expected that this acquisition will help enhance the customer experience and will integrate their jackpot functionality. The deal will help attract customers and will offer rewards and promotions tailored to the needs of the users.
It also entered into a partnership with Digital Gaming Corporation’s gaming division this week. As per the deal, the company will introduce a set of online games with DraftKings. It will allow DraftKings players in New Jersey to access diverse and premium online casino content.
Additionally, the company acquired Vegas Sports Information Network, a multi-platform broadcast and content company for an undisclosed amount. This deal is expected to generate huge earnings in the long term.
These partnerships will drive growth and revenue for the company in 2021. At the end of March, DraftKings was offering its services in 12 states but this number will soon expand. At present, about 19 states are considering legislation to allow online sports betting. Connecticut recently cleared the way for online gaming and DraftKings marked its presence there.
The Bottom Line on DKNG Stock
Out of the 23 analysts on TipRanks, 16 have a buy rating and six have a hold rating with a single sell rating. They have an average price target of $72.77, or 25% upside on today’s price.
On Monday, Cathie Wood also upped her stake in DKNG stock. Ark Next Generation Internet ETF (NYSEARCA:ARKW) purchased 30,100 more shares and Ark Fintech Innovation ETF (NYSEARCA:ARKF) purchased 431,100 shares.
All in all, DKNG stock can go higher than $70 in the coming weeks and it can generate high returns for investors. This recent pullback is a great opportunity to add the stock to your portfolio. There is nothing for investors to worry about.
The company is scheduled to release Q1 results on May 7 and this could drive the stock upward. If you are looking for a stock with high potential and growth prospects, bet your money on DKNG.
The fun has just begun!
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.