DraftKings is leading the way in the sports betting industry as sports betting legalization expands across the U.S. Is DKNG stock worth buying now, despite the huge price changes since its April 2020 debut?
Morgan Stanley maintained its overweight rating while raising the price target for DraftKings from 22 to 23. The stock gained 7% on Tuesday. The firm expects DKNG to achieve its first positive EBITDA quarter this year, with a rapid ramp-up into 2024. Shares have already risen 83% in 2023.
The shares dropped by nearly 1% on Wednesday, trading at around 20.60.
The first-quarter results will be released on May 4, before the opening of the stock exchange. Wall Street is expecting the company to make a loss of 84 cents on sales $688.8 millions.
DraftKings Fundamental Story
A new trend is emerging in the legalization of digital sport betting. In the November 2020 elections, voters in many states approved ballot measures legalizing sports betting and expanding gaming.
DraftKings, based in Boston, Massachusetts is ready to capitalize on this shift in attitudes towards sports betting. DraftKings, an online platform for sports betting, allows users to participate in daily fantasy games with the chance to win cash.
A survey by the Pew Research Center in 2022 found that around 20% of U.S. adult respondents said they had bet on sports in one way or another in the past 12 months. According to the American Gaming Association, commercial betting saw record revenues in 2022.
DraftKings has begun its journey to profitability. IBD data shows that after losing $3.16 in 2022 the company will lose $2.07 per share in 2020, and $1.01 by 2024.
DraftKings Stock: Strong revenue growth
The company's loss per share was 53 cents, compared to an 80-cents loss one year ago. DraftKings' Q4 revenue increased 81%, to $855 millions.
DraftKings lost $3.16 per share in the past year as revenues grew by 73%, to $2.24 Billion. Analysts expect DraftKings to continue growing its revenue, with an average annual increase of 22 percent through 2026.
DraftKings IBD Stock Rankings
DraftKings Earnings Per Share Rating is 46 out of 99. This is due to the company's inability to be profitable. The EPS rating measures a company’s ability to increase profits over time, based on the last two quarters of earnings and the previous three-to-five year period.
DKNG's stock has an IBD Composite rating of 93, which is improving from a previous 99. The Composite Rating is a simple way for investors to measure the fundamentals and technical metrics of a stock.
DKNG Stock Technical Analysis
DKNG is up 83% so far in 2023. Shares are growing on the right side of an angled cup base with a buy point of 21.72. Look for the handle that offers a lower entry.
According to IBD MarketSmith's chart analysis, DraftKings is about 3% from its latest entry as it recovers from its 50-day moving median.
DKNG stock is a good buy right now?
DraftKings is a long-term investment in the sports betting industry. The company's potential looks promising. The company is growing strongly in revenue despite its lack of earnings. It's also one of the leading players in the online gambling megatrend. A new buy point is not a good time to invest in DKNG. The stock is still below the buy point, so it's not time to buy.
Check out the IBD Stock Lists for more information on stocks that are nearing buy zones and other stocks. The Big Picture, IBD's daily stock market analysis, is a great way to see what the current trend in the stock market is.