Shares of online betting company DraftKings (NASDAQ:DKNG) have pulled back with brick-and-mortar casinos making a comeback and short-sellers targeting DKNG stock. However, those concerns are simply a diversion from the company’s long-term bull case.
It has only unlocked a mere fraction of its massive addressable market and will continue growing at a torrid pace. Therefore, the pullback in DKNG stock presents an excellent opportunity for investors to scoop up the stock at a bargain.
DKNG stock is down more than 35% from its highs in March. The broader pullback in growth stocks is a major reason for the drop. However, a report from short-seller Hindenburg Research has most recently been a thorn in its side.
The report alleges that the business has done business in Iran and has been involved in illegal gambling activity. Be that as it may, short sellers typically have vested interests in spreading such news. Therefore, investors should take the report with a grain of salt, and it should not deter them from DKNG stock’s bull case.
DraftKings Continues Its Upward Trajectory
DraftKings is the undisputed king of gaming, with a fantasy sports market share of roughly 30% in the U.S. market. Most recently, it reported its first-quarter earnings in May, which showed that the business was growing at a rapid rate.
DraftKings reported revenues of $312 million, representing year-over-year growth of 175%. This massive increase was primarily driven by state launches in Virginia and Michigan.
New state launches will continue playing a major role in sustaining its lofty growth numbers in the future. Moreover, the company has a keen eye for innovation and introduced several new features to drive engagement on its platform. It launched a variant game of blackjack called Spanish21, which is a unique offering among its peers.
More importantly, it has been collaborating with Dish Network’s (NASDAQ:DISH) Sling TV to offer sports betting information that effectively ties in sports updates into betting odds. Additionally, it also launches social media features on its platform, enabling customers to interact and share their bets effectively.
DraftKings has a strong leadership team that is extremely passionate about taking the company to the next level. So far, they have performed incredibly well and are on track to ensure that the company becomes a one-stop-shop platform for an online gaming.
DraftKings is now available in 12 states after its blockbuster launch in Virginia and Michigan. However, the online sportsbook market is in its infancy at this stage. This year, 25 state legislatures introduced legislation to legalize online sports betting. Naturally, many of these proposals will not make it past the finish line.
One of the states that introduced legislation in 2021 in New York, which boasts a population of over 19 million. It represents a massive market for DraftKings to gain entry if it can. It’s growing its user base swiftly, more than doubling its average monthly unique players for the first quarter.
As the wave of legalization of OSB continues in the country, DraftKings has a shot at stamping its authority on the sector. The market is getting competitive, and new markets will allow DraftKings to cement its authority and expand its revenue base to new heights.
Bottom Line on DKNG Stock
DKNG stock has slipped in the past month without a material change to its bullish narrative. It continues to push forward in the gaming market, opening up in new markets and offering a more well-rounded experience for its users. It continues to innovate and offer new unique features to improve the quality of its service.
DKNG stock is a buy.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines