DRAFTKINGS STOCK SOARING

DraftKings continues to grow despite the shutdown of sports.
DraftKings went public during a downtime for the business. There have been few sports to bet on to continue to generate revenue for the company. However, they continue to see their stock rise.

When DraftKings went public in April in NASDAQ, shares were around $17. They are currently up 270%, near $40 a share.

Their surge is surprising because of the fact that it is happening during a worldwide suspension of sports due to the coronavirus. DraftKings has quadrupled in worth, up to $12 billion.

FanDuel currently owns the top spot in the US betting market, but DraftKings is following right behind. Their plans to merge years ago was ended by federal antitrust regulators who sued, which ended up blocking it.

Maybe this is one of several companies that is benefiting from the federal government providing the money for the economy. But DraftKings is still losing money, and likely will be for the next couple of years. Their evaluation came in at $6 billion.

What Experts are Saying

Bloomberg has announced that seven analysts have rated the stock, with six recommending to buy. DraftKings is one of the most popular stocks that is being bought on Robin Hood.

The public recognizes the name in the stock market.

“DKNG is a recognizable name,” says one anonymous broker. “It’s the old Peter Lynch ‘buy what you know.’ That, along with the fact it’s billing itself as the only pure play on sports betting, and you pave the way for it to get a tech valuation.”

There are popular names that are involved in the business. Disney owns a 6% stake, while other known sports names such as Jerry Jones and Robert Kraft are reported to be key investors.

Immune to COVID-19

Customers of DraftKings are still using the platform, even with the few sports that currently exist. Sports such as Korean Baseball and German Soccer are still receiving bets on the platform.

“Who knew fantasy Korean baseball was so popular,” Morgan Stanley’s Allen wrote in a client note dated Sunday. DraftKings’ shift to “different forms of DFS (daily fantasy sports)/sports betting content (such as Korean baseball fantasy and esports sportsbook) suggest the near-term revenue declines will be less bad than we had previously thought.”

The company is still looking for ways to improve and expand its platform as sports return.

“With over 100 different leagues in total on the DraftKings platform and as additional sports leagues return to resume play, DraftKings Sportsbook will explore potential expansion opportunities of the live-stream functionality,” according to a press release.

Direction of the Company

DraftKings is only going to start generating more money once sports pick back up. They are hoping that many of these leagues can find a way to return to play safely.

DraftKings CEO Jason Robins wants to encourage more in-game-betting in America.

“In the UK, in-game is about 75% of the revenues at sportsbooks, and here’s it’s much lower,” Robins said in an interview with Barron’s. “You can bet on almost anything in an (English Premier League PINC soccer) game, including who will get the next yellow card (for penalties).”

For example, this could include whether or not an MLB batter will strike out or not in their at-bat.

Because of the impact of the coronavirus, state budgets are struggling to fund their budgets. This could be a time when sports gambling is considered in states where it is not yet legal.

California, Texas, Florida, and New York, the four largest states by population, still haven’t legalized online sports betting. California could see a vote as soon as November.