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DraftKings (DKNG) Rallying in 2023 on Sustained Sales Growth
The share price of the multi-channel sports betting and gaming company DraftKings Inc. (DKNG - Free Report) has been climbing northward so far in 2023, primarily on tech resurgence. The recently announced rate hike pause has also helped because, for a relatively young company, this entails more available funds for investing in growth.
DKNG’s shares closed out the previous session at $28.86, rising 8.3%. This comes on the back of an excellent June in which the share price advanced 13.8%.
The June performance and the continued rise in July can be attributed to the market reacting favorably to the company’s backing out from a deal to buy PointsBet Holdings Ltd. (“PointsBet”), a rival. For a young company that is yet to turn green on profits, Draftkings raised the stakes and forced the hands of Fanatics, a major competitor, to spend more for the acquisition of PointsBet than it initially intended to.
Draftkings, which is part of the Zacks Consumer Discretionary – Gaming industry and currently has a Zacks Rank #2 (Buy), is riding on the positivity surrounding its revenue growth rate. Since the beginning of the year, this gaming stock has surged 153.4% compared with the industry’s 26.6% growth.
In first-quarter 2023, the company’s sales grew 84.5% year over year. For the current year, estimated sales growth is 43.6%. The Zacks Consensus Estimate for the full year is pegged at a loss of $1.87 per share, indicating a year-over-year increase of 40.8%.
Bottom Line
Draftkings is a major player in a relatively new and fast-growing space. After the removal of the ban on sports betting by the Supreme Court in 2018, the sector has exploded, and around 33 states currently allow online betting of some sort in their territory. In these markets, depending on the state, Draftkings has around a fifth share of the pie.
It remains to be seen whether it can trump competitors like Corsair Gaming, Inc. (CRSR - Free Report) and DouYu International Holdings Limited (DOYU - Free Report) in the long run. Both Corsair and DouYu currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.