Our Stock of the Week is DraftKings (DKNG). DraftKings Inc. is a digital sports entertainment and gaming company. It offers multi-channel sports betting and gaming technologies, powering sports and gaming entertainment for operators in 17 countries. The company operates iGaming through its DraftKings brand in 5 states, as well as Golden Nugget Online Gaming in 3 states. Its Sportsbook is live with mobile and retail betting operations in the United States pursuant to regulations in 18 states. The company's daily fantasy sports product is available in 6 countries internationally with 15 distinct sports categories.
Last week, DKNG reported a very strong third quarter with revenues of $790 million versus estimates of $686 million and $501 million a year ago. The CEO commented, "We expect to generate approximately $200 million of positive Adjusted EBITDA in the fourth quarter of 2023 based on the midpoint of our updated fiscal year 2023 guidance and look forward to sharing our multi-year outlook at our Investor Day on November 14."
The strong earnings report produced a flood of increased targets from analysts as well as a technical breakout. There are 24 buy recommendations with a high target of $50. The average target price is around $38.
The stock broke sharply higher last week and closed strong. We do not want to chase the stock here but will be looking for a pullback toward support in the low $ 32s. Analyst day on November 14 should serve as a positive catalyst. We will be looking to build a position into volatility.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and buy or sell anytime for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in DKNG. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
