The 2022 NFL season is almost here, yet some sports gambling companies may be forced to forgo the marketing opportunity it presents. Investors will be looking to see whether a cut in marketing spending will lift the stocks of online sports-betting providers such as DraftKings (DKNG).
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Most online sports-betting businesses have only been making losses since their inception. However, many have looming profitability targets. For example, FanDuel, which is owned by Flutter Entertainment (FLTR), targets to become profitable by 2023. DraftKings and BetMGM also hope to achieve full-year profitability in 2023. BetMGM is the online sports gambling unit of MGM Resorts International (MGM), which co-owns the business with its partner, Entain (ENT).
Cutting Back on Marketing Spending for Profitability’s Sake
The 2022 NFL season kicks off in September. The football season usually presents an important marketing opportunity. However, sports-betting providers may have to dial back on the NFL season advertising to cut costs, according to a Wall Street Journal (WSJ) report.
How Long Is Each NFL Season?
The NFL season lasts 18 weeks. The season features 32 teams playing 17 games each. The games draw many viewers, and sports gambling brands have often used the opportunity to recruit new customers.
While the need to acquire new customers remains, sports gambling providers like DraftKings, FanDuel, and BetMGM also face the pressure to please investors. The DraftKings stock has dropped sharply from its $72 peak to about $20. The stocks of FanDuel parent Flutter Entertainment, and BetMGM parents MGM Resorts and Entain have also declined steeply from their recent highs.
Is DKNG a Good Stock to Buy Now?
The stock has declined about 26% year-to-date.
Despite the drop, Wall Street professionals remain bullish on DraftKings. On August 17, Roth Capital analyst Ed Engel upgraded DKNG stock to a Buy from a Hold. Engel also raised the price target on the stock to $25, from $18.
According to TipRanks’ analyst rating consensus, the DKNG stock is a Moderate Buy, based on 10 Buys and six Holds. The average DraftKings stock forecast of $24.07 implies 17% upside potential. If you are wondering how high the DKNG stock can go, the highest price target on the stock is $34 while the lowest target is $16.
Final Thoughts
If you are looking for a good online sports-betting stock to invest in now, DraftKings may be worth a look. The stock shows decent upside potential at current levels going by the consensus estimates. Elite investors are also bullish on the DKNG stock. TipRanks’ Hedge Fund Trading Activity tool shows that confidence in DKNG is currently Very Positive, as two hedge funds increased their cumulative holdings of the stock by 1.9 million shares in the last quarter.
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