Sports betting, according to DraftKings (DKNG) CEO Jason Robins, is at an “…important inflection point.” Basically, what that means is a lot more people are realizing that gambling on sports is now a lot more legal than it used to be. Investors were enthusiastic about this notion, and sent shares up fractionally in Friday afternoon’s trading.
Don't Miss our Black Friday Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Basically, Robins noted, most people now assume that sports gambling is legal in their area. That, in turn, means more people will take an interest in putting down a few dollars—or in some cases, significantly more than a few—on their game of choice that week. This means growth for DraftKings, Robins suggested, though to what extent is unclear.
After all, DraftKings’ Thursday earnings report came with a cut to full-year guidance, as even sports betting would take a hit while grocery store prices and the like remain high. Further, DraftKings is “…in a heavy acquisition period,” which means more capital expenditures and more margin pressures. However, there is one other problem for DraftKings.
Every Bookie’s Worst Nightmare
One other serious problem that DraftKings is facing right now is what Robins called “…customer-friendly sports outcomes early in the fourth quarter of 2024.” Basically, huge numbers of bets did not go the house’s way. In fact, a Sportico report noted that all those winning bets cost DraftKings a whopping $250 million.
That did not stop DraftKings from pulling in $1.1 billion in revenue, though, which was a match for analyst consensus estimates. And its revenue projections for 2025 were looking pretty good as well, coming in at a range of between $6.2 billion and $6.6 billion. That handily beat consensus estimates that were looking for around $5.86 billion.
Is DraftKings a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on DKNG stock based on 21 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 14.88% rally in its share price over the past year, the average DKNG price target of $49.08 per share implies 24.85% upside potential.
