10 Best NASDAQ Stocks Under $50 to Buy

6. DraftKings Inc. (NASDAQ:DKNG)

Number of Hedge Fund Holders In Q2 2024: 56

Share Price: $40.94

DraftKings Inc. (NASDAQ:DKNG) is the second biggest online sports betting company in America. Estimates show that the firm commands 32% of the market, which when combined with FanDuel’s 35% means that the two control two thirds of the market. This provides DraftKings Inc. (NASDAQ:DKNG) with key advantages, as the firm has benefited from lax regulatory environments all over the US that allowed it to set up operations. These same laws now constrain the entry of new companies in the industry, and the duopoly like nature of its industry means that DraftKings Inc. (NASDAQ:DKNG) has to primarily compete with FanDuel when it comes to cost control, player addition, revenue per player, and other metrics. Additionally, the firm has also been growing its operations through acquisition, with one such deal being its purchase of JackPocket. The deal expanded DraftKings Inc. (NASDAQ:DKNG)’s presence in the broader digital gambling industry by bringing a digital lottery company under its wing. The shares have gained 7.5% since the Fed’s interest rate cuts and could add to these if investors gain additional confidence in the economy.

Fred Alger Management mentioned DraftKings Inc. (NASDAQ:DKNG) in its Q2 2024 investor letter. Here is what the fund said:

“DraftKings Inc. (NASDAQ:DKNG) is a digital sports entertainment and gaming firm designed to ignite the passion of sports enthusiasts through a diverse offering that spans daily fantasy, regulated gaming, and digital media. We believe the company’s expertise in product development and customer acquisition, which established it as the market leader in daily fantasy sports (DFS), positions DraftKings to be a key driver in advancing the U.S. sports betting market’s growth. The company reported strong fiscal first quarter results, with revenues beating analyst estimates due to broad-based momentum in customer engagement and acquisition. However, on May 28th, the Illinois Senate passed a new state budget that includes a tiered progressive tax on sportsbook operators, effective July 1, 2024. This new tax ranges from 20% to 40% on gross revenues, a significant increase from the current 15% tax rate. Despite management’s belief that it can mitigate the tax impact by reducing promotions in Illinois, this development negatively affected the company’s share price.”