As the NFL season heats up, attention is turning not only to games but also to investment opportunities in stocks related to gambling. A prominent player in online gambling, DraftKings has emerged as a staple of the upcoming football season, especially as it has attracted the attention of Wall Street.
Chad Beyon, senior gaming analyst at Macquarie Capital, points to DraftKings as a standout choice for investors seeking exposure to the online gambling sector as the NFL regular season begins Sept. 5. DraftKings, which currently trades at around $35.33 per share, has been given a $50 target price by Macquarie to reflect significant confidence in its short-term performance.
In a detailed analysis published Aug. 26 by the Las Vegas Review-Journal, Beyon explains why DraftKings has the upper hand, especially as the NFL season unfolds. “DraftKings are ideally positioned to benefit from favorable NFL game results, inherently higher structural holdings, and ongoing momentum in online sports betting and iGaming,” Beyon explains in a research note.
Macquarie Capital sees this as a good time for the stock, even as the company lags behind the broader market in 2024. The company expects DraftKings to be well positioned to beat expectations in the second half of the year, combined with current holding and growth trends and easier year-over-year comparisons in the coming quarters.
Overcoming challenges and profitability milestones
DraftKings recently celebrated a significant financial milestone by announcing its first profitable quarter since going public. The performance marks a turning point after backlash from customer surcharges on proposed bets to offset high operating costs, particularly in states like New York and Illinois. The offer could have weakened its market position due to widespread criticism and a lack of similar action from rivals.
DraftKings and its New York-based rival FanDuel dominate the U.S. online gambling market, accounting for about 70% of sports betting transactions and more than 60% of the nation’s internet gambling revenue. DraftKings is a formidable enterprise, although it has a market cap of $17 billion, trailing FanDuel’s parent company, Flutter Entertainment, which boasts a market cap of $22.8 billion following its recent U.S. listing.
DraftKings’ Advancement and Operation in Nevada
Despite regulatory hurdles not offering online gambling in Nevada, DraftKings retains significant operating space in Southern Nevada. Its Las Vegas office is based on a team of traders and legal professionals and is pivotal in handling customer service.
MGM Resorts International remains a notable name in the Las Vegas gambling scene for its significant online and physical gambling operations. Macquarie Capital remains optimistic about MGM and has set a price target of $55. Similarly, Caesars Entertainment is positive with a price target of $52 per share, demonstrating the growth potential of these traditional casino operators along with their online platforms. 동행복권파워볼