DraftKings (DKNG) stock forecast: time for a new monarch?
The DraftKings (DKNG) story began when three co-workers bonded over a shared passion for fantasy sports. Their mutual passion evolved to build a sports betting company with footprints in eight countries.
Aiming to build a platform and customer-centric destination for exclusive betting experiences, DraftKings transformed how fans engage with sports, offering a sports entertainment experience across several popular games.
DraftKings went public on the Nasdaq on 24 April 2020 through a tri-merger with special purpose acquisition company (SPAC) Diamond Eagle and a Bulgaria-based gaming technology company called SBTech. Jason Robins, co-founder and CEO of DraftKings, commented on the merger:
DKNG stock launched at $20.49. It fell 14.10% to an intra-day low of $17.6, closing its first day at $19.35.
In the latest DraftKings stock news, on 6 January it became one of the first companies to launch its mobile and online sportsbook in New York. DKNG stock rose 5.58%, up from $25.8 to $27.24 on 8 January 2022.
Join us as we find out what lies ahead for this sports betting company, undertake a DraftKings share price forecast and get analyst insights on DraftKings stock potential.
Fundamental analysis
On 5 November 2021, DraftKings released its Q3 2021 financial results. Growth of 61.36% was reported with revenues up by $81m. Compared to $213m in revenues for the three months to 30 September 2021, Q3 2020 revenues were at $132m.
A key performance indicator is growth in the number of monthly unique payers (MUPs). The company defines MUPs as users who have paid engagement across one or more product offerings.
From Q3 2020 to Q3 2021, MUPs grew by approximately 31.37%. For the three months ended September 2021, revenue from MUPs was reported at $1.34m. In Q3 2020, it was $1.02m.
As a result of strong engagement and cross-selling initiatives, average revenue per MUP (ARPMUP) increased by 38.23%, from $34 to $47.
Another highlight of Q3 2021 was migration from Kambi to its in-house technology platform powered by SBTech.
With the help of SBTech, DraftKings has been able to vertically integrate its business by owning its own technology platform for its primary product offering of sports entertainment and betting.
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Stock price news and movements
Q3 2021 results revealed an overall $150m, or 37.97%, decrease in the company’s bottom-line numbers, with net loss having increased from $395m in Q3 2020 to $545m.
Within a week from the third quarter financial results being made public, the DKNG stock price had fallen by 7.12%. On 5 November, when Q3 2021 results were announced, the stock was trading at $43.62 – by 12 November it had fallen to $40.51.
In a 9 August 2021 press release, DraftKings announced that it would acquire and leverage Golden Nugget Online Gaming’s popular brand name and existing combined database of more than five million customers. The company spent around $1.56bn in acquiring Golden Nugget. A day after this was announced, the stock lost 0.72%.
During pandemic-induced global lockdowns, the popularity of online gaming and betting soared. On 26 January 2021, DKNG stock closed at $54.06. Since then, the stock has lost 64.26% in value, reaching $20.33, at the time of writing (27 January 2022).
Future price predictions and analyst forecasts
Milan Vaishnav, CMT, MSTA, a Consulting Technical Analyst at Gemstone Equity Research & Advisory, shared a technical analysis of the DKNG share market:
Based on the data compiled by Market Beat, as of 26 January 2022, of 26 analysts, 17 rated DKNG stock a ‘buy’, eight suggested a ‘hold’ and one recommended a ‘sell’. The consensus 12-month DraftKings stock price target is $56.13. The DKNG stock forecast price, according to Market Beat, varies from the low of $23 to the high of $85. The current analyst price target consensus has an upside of 151.05%, based on the last closing price of $19.32 as of 26 January 2022.
Algorithm-based forecasting service Wallet Investor, which usually provides 5-year price targets for stocks, does not offer a DraftKings stock prediction beyond February 2024. According to its forecast, as of 27 January 2022, the DraftKings future stock price could potentially decline to 0.000001 by March 2023. Wallet Investor is bearish on DraftKings stock value, restricting our scope to provide DraftKings stock outlook for 2025-2030.
On 25 January 2022, Moffett Nathanson slashed its DraftKings’ stock projection target from $36 to $25, but maintained its ‘neutral’ rating. Northland adjusted its price target to $45 from $75, but kept its ‘outperform’ rating, as of 21 January 2022. On the same day, Needham reiterated its ‘buy’, but lowered its price target to $46 from $73.
When looking for a long-term forecast, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. An analyst’s DraftKings stock analysis is based on making fundamental and technical studies of the stock’s performance. But note that past performance is no guarantee of future results.
FAQs
Is DKNG a good stock to buy?
DraftKings has reported strong revenues in Q3 2021, but continues to make significant losses. The benefits from its expansion strategies remain to be seen. According to data compiled by Market Beat, of 26 analysts, 17 rated the DKNG stock a ‘buy’, eight suggested a ‘hold’ and one recommended a ‘sell’.
Note that analysts’ predictions are often wrong. Forecasts shouldn't be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
Will the DKNG stock go up or down?
According to an algorithmic-based application, Wallet Investor, the share price for DKNG stock could potentially decline to $0.000001 by March 2023.
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