Puerto Rico Expansion Highlights Future Upside for DraftKings Stock

  • DraftKings (DKNG) stock has fallen sharply in 2022 so far
  • An earnings event is coming up soon, and there are positive events for prospective investors to take note of
  • Investors should consider buying some DraftKings shares prior to the earnings data release, and maybe some more shares afterwards
DraftKings (DKNG) logo, magnified, on its app.
Source: Lori Butcher/Shutterstock.com

Digital sports entertainment and gaming company DraftKings (NASDAQ:DKNG) plans to announce its first-quarter 2022 financial results on May 6. DKNG stock is worth owning before and/or after the earnings event.

Since quarterly earnings releases can be unpredictable, cautious traders can wait until after May 6 to start a position in DraftKings shares. However, if you’re like a sport bettor and don’t mind gambling a little bit, then feel free to buy a few shares beforehand.

As we’ll discover, the sentiment is currently quite negative when it comes to DKNG stock. This could set up a contrarian opportunity for bottom fishers, as low expectations can lead to positive earnings event surprises.

Besides, DraftKings has some news to report, which should get the shareholders excited about the company’s future prospects. Perhaps the stock market is just a big casino, but the odds actually look pretty good for DraftKings in 2022.

DKNG DraftKings $14.17

What’s Happening with DKNG Stock?

Back in early September of last year, DKNG stock looked like a darling on Wall Street. The share price hit a 52-week high of $64.58 before embarking on a prolonged downward slide.

Just recently, the stock fell to $15 and change. This is either a toxic asset or a prime bargain, depending on one’s perspective.

Sure, the upcoming earnings release could induce a much-needed rally. Even modest bottom- and top-line beats might send DKNG stock much higher.

What we need to bear in mind is that DraftKings is a work in progress. Several months ago, the company acknowledged that it “expects its Adjusted EBITDA loss in 2022 to be between $825 million and $925 million.”

If all goes according to plan, DraftKings should be able to rectify this situation by the end of this year. Thus, “assuming we had not launched any additional states after December 31, 2021, we expect that we would have generated positive Adjusted EBITDA in the fourth quarter of 2022.”

So, just be patient with DraftKings. This isn’t a casino game where you can just cash in your chips today or tomorrow.

Expansion into Puerto Rico

Meanwhile, the skeptics can’t say that DraftKings isn’t making any progress as a business. In fact, the company is broadening its geographic horizons.

To that end, DraftKings just inked a deal with the Mashantucket Pequot Tribal Nation. Together, they plan to offer “the DraftKings online and retail sports betting experience in Puerto Rico, subject to applicable licenses and regulatory approvals being obtained.”

There, gamblers can look forward to seeing the DraftKings retail sportsbook in the Foxwoods El San Juan Casino. This is anticipated to be available “in the coming weeks, pending receipt of applicable licenses and regulatory approvals.”

It will be quite an experience, to put it mildly. According to the press release, the space inside the Foxwoods El San Juan Casino will include six betting kiosks, two over-the-counter ticket windows, a “massive” video wall as well as bar and dining services.

Matt Kalish, president of DraftKings North America and co-founder, celebrated the occasion, saying, “Puerto Rico is known for its rich and vibrant sports culture, and we look forward to being able to provide fans with a safe and legal form of sports betting through our retail and online sportsbooks.”

What You Can Do Now

Clearly, DraftKings is making strides in introducing its sports betting experience to new regions. Hopefully, the company will achieve its objective of positive adjusted EBITDA in 2022’s fourth quarter.

Until then, investors can buy some DKNG stock shares either before the imminent earnings event, or afterwards. Heck, you can even buy before and after, if you’re in the mood to gamble.

On the date of publication, David Moadel 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.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/puerto-rico-expansion-highlights-future-upside-for-dkng-stock/.

©2022 InvestorPlace Media, LLC