DraftKings (DKNG), a prime on-line sports activities playing platform, has been making all the fitting strikes.
The corporate has been specializing in acquisitions and partnerships to extend its choices, and propel its development. DKNG inventory is now up by over 40% year-to-date, with the share value hovering over $62.
The net betting platform, which comes with a valuation of greater than $25 billion, has benefited from extremely spectacular Q2 outcomes, and is showing increasingly more like an awesome decide at this valuation. (See DKNG inventory charts on TipRanks)
That’s to not say this inventory is affordable. The corporate trades at 16.4 occasions ahead income. Nevertheless, given the expansion this inventory has proven, and the chance capital that’s going into the market proper now, something is feasible lately.
Let’s check out a few the important thing catalysts that buyers are betting will increase this playing inventory from right here. I’m barely bullish on the inventory.
GNOG Deal May Drastically Profit DKNG Inventory
DraftKings introduced its plan to accumulate Golden Nugget On-line Gaming (GNOG) on August 9. This acquisition could be an all-stock transaction valuing GNOG $1.56 billion.
Traders are hoping that the corporate’s acquisition may additional increase DraftKings’ already-impressive development price. The deal is predicted so as to add $160 million in income to DraftKing’s fast-growing prime line.
One other notable facet buyers are centered on is market share. The net playing market stays more and more fragmented. By consolidating a key competitor, DraftKings additionally features entry to the essential New Jersey, Michigan, and Texas markets.
Golden Nugget has a robust presence within the New Jersey on-line playing business with over 9% market share. By buying GNOG, DraftKings can mix its operations with that of GNOG in Michigan, West Virginia and New Jersey, thereby boosting its gross margins.
Main Offers for Upcoming NFL Season
The soccer season within the U.S. may be characterised as nothing lower than a large craze. DraftKings has already ready itself to take advantage of the NFL season, which kicked off on Thursday.
The corporate’s platform has over 1.1 million month-to-month energetic customers. The corporate has been chosen as one of many NFL’s unique sports activities betting companions, whereas Genius Sports activities (GENI) has been given the unique distributorship of official statistics and sports activities betting information.
DraftKings has strategically entered right into a take care of Genius Sports activities, whereby DraftKings will get entry to Genius’ information and content material, whereas Genius will get DraftKings’ data-driven promoting tech.
DKNG has additionally entered right into a take care of Simplebet. Simplebet is a tech firm that offers with micro-betting. This deal will enable DraftKings to supply Simplebet’s services and products to its customers all through NFL, MLB, and NCAA tournaments.
Wall Road’s Take
In response to TipRanks’ analyst score consensus, DraftKings inventory is a Reasonable Purchase. Out of 14 analyst rankings, there are 10 Purchase suggestions, and 4 Maintain suggestions.
The common DKNG value goal is $70.85. The analyst value targets vary from a excessive of $105 per share, to a low of $51 per share.
Traders are paying up for high quality lately. Certainly, the standard of DraftKings’ present development has been spectacular. Given the corporate’s numerous acquisitions and strategic offers of late, there’s so much to love concerning the story.
After all, draw back dangers must be considered with this inventory. Any variety of components may derail DraftKings’ trajectory and momentum.
Nevertheless, for now, DraftKings inventory appears to be like prefer it’s on a sizzling streak. As they are saying, you by no means go away the desk while you’re on a sizzling streak.
Disclosure: On the time of publication, Chris MacDonald didn’t have a place in any of the securities talked about on this article
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