Kings project today
(As of 01:00 PM ET)
- 52 week range
- $28.69
▼
$49.57
- Price target
- $51.00
Digital sports betting and iGaming app provider DraftKings Company Nasdaq:DKING It was in hyper-growth mode through 2024 but continued to lose money and even issued bearish guidance for 2024. The company, along with rival FanDuel, is owned by Flater Entertainment Company New York Stock Exchange: Floodand faces increased scrutiny over anti-competitive practices. US Senators Peter Welch and Mike Lee want the US Federal Trade Commission (FTC) to investigate the matter as they claim that the two computer and technology sector companies control nearly 90% of the online betting market share in the US.
This led to shares selling off for seven straight sessions to the firm daily VWAP support level of $39.56. Here are five reasons for bullish investors who have been waiting for a pullback to bet on DraftKings in 2025.
1) DraftKings continues to grow revenue at double-digit rates
Growth continues at DraftKings, as evidenced by 39% year-over-year revenue growth in the third quarter to $1.1 billion. The company increased the number of monthly unique payers (MUPs) by 55% to 3.6 million. DraftKings is the third largest sports betting platform in the United States. The third quarter marked the return of the football and college football betting season. Revenue growth was driven by effective acquisition of new customers, good customer engagement, expansion into new jurisdictions, high retention percentages, and the acquisition of Jackpocket Inc., an application that enables users to purchase lottery tickets on their mobile devices.
Jackpocket users can select their games and numbers that Jackpocket caters to, and scan a ticket with the order confirmed. Tickets are stored safely in a fireproof safe. Prizes of less than $600 are credited to the user’s Jackpocket account, while a ticket is handed over to the user for a larger win. Jackpocket collects fees ranging from 7% to 10% on transactions as the user keeps all the winnings. Jackpocket also has live dealer games and digital casino games.
2) DraftKings will benefit from the continued legalization of online sports betting
Online sports betting has proven to be an effective way for states to generate tax revenue. As of December 21, 2024, DraftKings is currently legal Lives in 26 states (Technically, 25 states and the District of Columbia) and Ontario, Canada. This represents 49% of the US population and 40% of the Canadian population. It also has in-person betting available in 14 states. DraftKings has betting on horse races in 20 states. Missouri was the latest state to legalize sports betting on November 5, 2024, which DraftKings plans to launch in 2025 pending regulatory approval.
Expect a rise in new states legalizing sports betting and iGaming. California is the largest potential market for legalizing online sports betting. However, it faces stiff opposition from tribal casinos. A previous attempt at legislation through Proposition 27 failed in 2022. Texas is the second-largest potential market, but an attempt was made in 2023, but was voted down. Florida, Georgia and Minnesota are the next biggest potential markets for DraftKings.
3) iGaming legalization is a growth engine
iGaming is the term used for online gambling through online casinos, which can include a large number of slot machines, keno, digital games and live table games such as blackjack, poker and roulette. Only DraftKings works in five states, Including Ontario and Canada, with its own iGaming platform. Although DraftKings does not provide specific situations, iGaming margins are much higher (70% to 90%) than sports betting margins (5% to 10%). This is because the house always has a built-in advantage in casino games as well as a higher frequency of play with digital games. In contrast, sports betting only offers a “vig,” also called a “hold,” which DraftKings receives to facilitate bets.
5) DKNG stock is trying to break through the MSL of the descending triangle pattern
A descending triangle is usually an indicator of a bearish chart pattern of higher highs on a bounce against flat bottom support. The bearish upper trend line converges with the flat horizontal lower trend line support at the high point. A breakout occurs if the stock falls below the lower trend line support. A breakout is triggered if the stock rises above upper trend line resistance.
The market structure low (MSL) buy signal is triggered above the high of the higher low candle after the three candle formation which consists of a lower low, lower low and lower high.
After forming a swing high at $45.87, DKNG proceeded to form ten consecutive lower-low candles before a green higher-low candle formed above the daily flat VWAP at $39.56. The high and low of the candle is $40.62, which also markets an MSL buy trigger. A descending triangle breakout could occur if DKNG can rebound to the $40.62 level. The daily RSI is slowly rising through the 42 range, likely to gain momentum. Fibonacci (Pullback support levels (Fib) are located at $88.22, $84.35, $76.99, and $73.06.
The average consensus price target for DKNG is $51.00Which means an increase of 26.39% The analyst’s highest target price is at $62.00. The company has buy ratings from 23 analysts and hold ratings from three. The stock has a short interest of 2.23%.
Actionable options strategies: Bullish investors could consider using cash-secured sell-offs at Fibonacci retracement support levels to buy the dip. If allocated to stocks, writing covered calls at rising Fibonacci levels implements a wheel strategy for income opportunities while hedging the downside with the premiums received.
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