Keep an eye on DraftKIngs (DKNG).
After pulling back from about $65 to support around $35.07, DKNG has become excessively oversold. All after a disappointing third quarter report, and news the company dropped its $22 billion bid for Entain, which would have given it a foothold in online international gambling.
In its third quarter, DKNG posted a quarterly loss of $1.35 a share on sales of $213 million. Analysts were looking for a loss of just 98 cents on sales of $236.9 million.
“Lower-than-expected sports betting hold primarily due to NFL game outcomes impacted revenue and EBITDA in the quarter,” said CEO Jason Robin, as quoted by Barron’s. “Strong customer acquisition performance in new state launches, particularly Arizona, drove additional promotional investment, which also impacted third quarter revenue.”
With a good deal of negativity now priced into the stock, the stock may be a buy, especially with insiders buying about $2.6 million worth of stock.
DKNG director and Vice Chairman Harry E. Sloan bought 50,000 shares for $2 million on November 16, noting that, “I am confident in DraftKings’ growth trajectory and leading position in the U.S. gaming market. I remain excited in the long-term opportunity DraftKings presents and [CEO] Jason [Robins] and his management team’s ability to deliver on their compelling vision for the company’s future.”
Director Steven J. Murray bought 10,000 shares for $366,600 on November 19, believing DKNG has “tremendous long-term growth potential,” as also quoted by Barron’s. Director Woody Levin also bought 7,000 shares for $260,000, viewing DKNG as an attractive opportunity.
Even better, there’s plenty of industry growth ahead.
Goldman Sachs, for example, believes the industry could grow 40% a year over the next decade. In addition, according to Grand View Research, the market could be worth up to $140.26 billion by 2028, expanding at a CAGR of 10.1% between 2021 and 2028.
