Fans of the popular sports betting app DraftKings (NASDAQ:DKNG) are likely in high spirits today. Two days before the biggest sporting event of the year, DKNG stock is up a solid 2% on an otherwise dreary day for the markets.
What’s behind DraftKings’ uptick?
Well, a week ahead of its earnings scheduled for Friday, Feb. 18, some investors have already added to their positions in the stock. As per LegalSportsReport, both Vanguard Group and Ark Investment Management have increased their holdings of DKNG through December. This past winter spelled a troublesome period for DraftKings, which saw its shares shed nearly half in value. Falling from $50 per share on Oct. 1, DKNG closed the year at $27.47. That’s far below its March high of $72. However, some investors clearly viewed this drop as a discount on the high-margin growth name and acted accordingly.
As of Dec. 31, Vanguard increased its stake in DraftKings to 26.3 million shares, reflecting 6.5% ownership of the company. This is a fairly substantial increase from September, in which the investment firm reported owning 24.7 million shares or 6.1%. Cathie Woods’ Ark also has a sizable stake in DKNG, reporting roughly 5% ownership.
That’s not the only news boosting DraftKings today, however. What else is going on with the sportsbook company?
DKNG Stock Climbs on Strong Morgan Stanley Upgrade
Investment banking giant Morgan Stanley also got in on the DraftKings hype — and in no small way. On Jan. 26, the bank released an upgrade notice titled, “Too Big an Opportunity to Ignore.” Analyst Thomas Allen detailed the conditions around his $31 price target for DKNG stock. Arguing that DraftKings will be a leader in the burgeoning, billion-dollar sports betting industry, the launch of mobile sports betting in New York only enhanced the company’s value.
“While we and the market have been focused on short-and medium-term profit problems, we believe with the current price that one should not ignore that DKNG is a leading market share player in what will be a very large profitable market.”
Allen also cited DKNG’s impressive 46% profit margins that, despite being expected to drop slightly, are still very strong and should only continue to expand long-term. Finally, the analyst noted that due to generally bearish sentiment on the stock, it won’t take much for its share price to “pop.”
DraftKings is a big name in the sports betting world. Still, whether today’s gains mark a resurgence for the company remains to be seen.
On the date of publication, Shrey Dua did not hold (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.