Can March Madness and a new collection of non-fungible tokens (NFTS) revive the fortunes of sports betting company DraftKings (NASDAQ:DKNG) and DKNG stock?
The Boston-based company hopes so. On the eve of the college basketball tournament, DraftKings announced it is launching a new March Madness NFTs collection, which is the first of its kind for the company, which also specializes in fantasy sports.
Some cryptocurrency enthusiasts are even speculating that the new March Madness NFT collection may serve as a bridge to Web 3.0 as it will allow users to place bets on basketball games while purchasing NFTs. For DraftKings, the move comes as its stock is down 75% over the past six months, including a 42% decline so far this year.
What Happened With DKNG Stock
In a statement, DraftKings said its March Madness NFTs represent “a new opportunity to gamify the fan experience.” The company said it will start selling its College Hoops Collection today, March 16. The first NFT, titled “Going Dancin’” will sell for $10 and only 6,464 of the collectibles are available to purchase. Each of the NFTs will feature an image of a cartoon basketball.
Sports betting is really in focus as March Madness, which lasts from March 15 to April 4, kicks off. DraftKings already has a strong presence in sports betting, and some speculate that these NFTs can help it attract new users. This specific collection will give holders virtual credits to place bets or enter fantasy contests.
It is the addition of virtual credits that has some observers praising DraftKings, and calling the company a bridge to Web 3.0. And while the College Hoops Collection is the company’s first in-house NFT foray, DraftKings has been active in the NFT space for many months. Last summer, it launched a marketplace where it sells NFTs from Autograph, a company co-founded by Tom Brady. DraftKings says it is planning more NFT collections for other sports events, including the NBA playoffs and next year’s Super Bowl. Plus, the company plans to launch an NFT-based fantasy game ahead of the NFL season this fall.
Why It Matters
DraftKings has been working to grow its business and gain market share as more U.S. states legalize sports betting. Roughly 30 U.S. states have legalized sports betting, with 18 states legalizing online sports betting. DraftKings has been doing its best to capitalize on the growing legalization. For instance, DraftKings was a top advertiser during last month’s Super Bowl, giving away $10 million in free bets and promotions to people who used its app to wager on the game.
However, the heavy marketing spending has caused concerns among analysts who cover DraftKings. Wall Street pros point to the fact that DraftKings continues to spend more than $500 million on marketing, which is holding back its profitability.
DKNG stock is up 4% today following news of its NFT collection. That’s good news for shareholders.
The NCAA basketball tournament is a major sporting event and attracts a lot of media attention. DraftKings is clearly doing its best to capitalize on the event. However, longer term, the company’s stock is likely to remain depressed until DraftKings outlines a clear path to profitability. In the current market, stocks of fast-growing, unprofitable companies appear out of favor with investors.
On the date of publication, Joel Baglole 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.