DraftKings Has Wind at Its Back Amid Peak Sports Season
Shares of DraftKings are off to a strong start this week as the stars align for professional sports. In addition, a Wall Street bank recently touted the sports-betting stock, putting wind in the sails of the company.
Citigroup started coverage on DraftKings with a buy rating with expectations that the stock has more runway for gains. Citi analysts say that as the sports betting market comes into its own, shares of DraftKings could increase close to 40% to $66. So far this year, DraftKings’ stock is up 5%. According to Citi, DraftKings is at the top of the heap in the sports betting arena.
Citi analysts are not the only ones bullish on the sports betting industry. Widely cited former hedge fund manager Will Meade tweeted that “major sports betting stocks,” including DraftKings, Penn National Gaming and Rush Street Interactive, are currently on sale in his opinion. The reason, Meade says, is because sports betting volume is now in its “peak period,” citing the MLB playoffs and World Series, the NFL and the NCAA as well as the upcoming NHL season.
I would argue all major sports betting stocks $DKNG $PENN $RSI are incredibly cheap here, bc we are in the peak period for sports betting volume.
Baseball playoffs, world series
College and NFL Football and
NHL season starts October 12th…
— Will Meade (@realwillmeade) October 7, 2021
Sports betting apps are gaining in popularity. Investment advisor Ross Gerber, who is at the helm of Gerber Kawasaki, said that downloads of U.S. sports betting apps were on the rise last month, with DraftKings snagging most of the market share pie, followed by FanDuel, BetMGM and Barstool Sports.
— Ross Gerber (@GerberKawasaki) October 5, 2021
Deal in the Works
DraftKings recently bid $22 billion to acquire UK-based gaming play Entain, which is becoming an increasingly attractive target. Entain just reported a 12% jump in sports-betting revenue as well as a 4% increase in gaming sales. The British gaming company expects to report 2021 revenue of GBP 850 million-900 million. Its strong performance could mean that DraftKings has to pony up more before its offer is accepted.
Incidentally, Entain’s revenue growth is being fueled by a joint venture it has in place with MGM called BetMGM. Entain previously rebuffed a takeover bid from MGM for its low-ball offer.
If DraftKings wants to put its money where its mouth is, the company will have to formalize its bid for Entain sooner than later. In the meantime, the chances that Entain will decide to go it alone are increasing, analysts say.