DraftKings Has Monstrous Potential in the Future of Sports Betting

Online gaming company DraftKings (NASDAQ:DKNG) has been the talk of the industry in the past year. The legalization of online betting has transformed the fortunes DKNG stock, and the company expanded its revenue by more than 70%.

Image of the DraftKings app on a smartphone screen.
Source: Tada Images / Shutterstock.com

The company has made several acquisitions over the year and is constantly growing its presence across different states. DKNG stock hit all time high earlier in March. It has shown volatility since then and is trading much lower at less than $47 today. 

I believe DKNG stock will certainly reach the all-time high again, but it may take some time. The sports betting industry is massive, DraftKings is in a growth stage and there is huge potential to expand.

Let us dig deeper into the catalysts working for DKNG stock. 

Massive Industry To Cater To

Despite the impact of the pandemic which led to short seasons and canceled tournaments, online sports betting has been consistently growing. According to PRNewswire, the online sports betting industry will go from $9.5 billion in 2020 to $37 billion in 2025. This is massive growth and DraftKings will play a major role here.

The company has a stronghold on the industry and is making the right moves with partnerships and acquisitions to ensure that it grabs maximum users. If online sports betting is legalized in all states, the numbers could be significantly higher. 

The company is not only offering an exciting experience to the users, but is also working on building alternative sources of revenue. Right from the comfort of your home, you can engage in a game and socialize with your friends. It has become a huge hit with sports fanatics. 

The company revised its full-year outlook after reporting smashing results and a company will only take this step when it is confident of meeting the expectations. DraftKings has solid potential in the industry and it could become one of the top players by 2023.

The Golden Nugget Acquisition 

Although the recent deal with Entain Plc did not work out, DraftKings made several partnerships and acquisitions that will work in its favor. One of the most exciting planned acquisitions is Golden Nugget Online (NASDAQ:GNOG). Interestingly, the company has enough cash to expand the market through acquisitions and it is walking on the right path. 

I have my hopes pinned on this partnership which will help expand the company. This transaction is expected to be wrapped up in the next six months and it will add 5 million users to the company. It will also help reduce the losses of DraftKings as Golden Nugget is a solid, revenue-generating company. 

The Bottom Line On DKNG Stock

Considering the potential of the company and the industry to cater to, DKNG stock is well positioned at the current level. The stock will go higher in the coming months and this dip is a good chance to enter. Ark Investment’s Cathie Wood is a fan of DKNG stock and has bought it time and again. 

DKNG stock is promising for the long term and has a massive user base. It has a high revenue growth, and the company is putting the money in the right places by partnering with the right players and companies. The stock has been trading in the range of $40s for a month and I do not see a breakout point any time soon.

The third-quarter results may take the stock higher to the $50s. If the company manages to report  higher average revenue per user, it will be a game-changing development. DraftKings will report third-quarter results on Nov 5. 

The stock is clearly undervalued considering the market and the ability of the company to generate revenues. Buy DKNG stock before third-quarter results. 

On the date of publication, Vandita Jadeja 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.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long-term gains. Her knowledge of words and numbers helps her write clear stock analysis.

Article printed from InvestorPlace Media, https://investorplace.com/2021/11/dkng-stock-has-monstrous-potential-in-the-future-of-sports-betting/.

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