1. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 56
As a pioneer in daily fantasy sports, DraftKings Inc. (NASDAQ:DKNG) was founded in 2012. Then, in response to a 2018 Supreme Court decision allowing states to authorize online sports wagering, the company entered the online sports and casino gambling markets. Rising to the top of the North American sports betting and iGaming business, it now shares a 70% revenue share with FanDuel.
Approximately 40% of Canadians can now access DraftKings’ online or retail sports betting in 25 states, as well as its iGaming offerings in seven states. In addition, the company creates and licenses online gaming items and runs a non-fungible token commission-based marketplace.
While adjusted EPS of $0.22 exceeded forecasts, the company announced Q2 2024 revenues of $1104 million, a 26.2% YoY rise driven by organic growth factors, and new market entries slightly missed Wall Street projections. DKNG stock was down almost 4% following the Q2 2024 results, despite decent performance.
The company improved its revenue projection for 2024, but because of higher client acquisition costs and an Illinois tax rate change, it reduced adjusted EBITDA.
By 2030, Morningstar analysts believe that the online gambling giant will be in a strong position to take advantage of the $40 billion sports betting and iGaming income opportunity in North America. Nonetheless, there is fierce rivalry amongst online gaming companies, as some states have over twenty state licenses.
Benchmark recently maintained a Buy rating on the shares and increased the company’s price objective for DraftKings Inc. (NASDAQ:DKNG) from $41 to $44. According to the analyst, DraftKings is still “a top idea for 2024.” The stock is expected to have a “strong run” until year-end, given that shares have dropped 2% thus far this year. The analyst notes that DraftKings’ improved outlook “creates an attractive entry point,” driven by greater market win margins in Q3, new user growth, traditional tax reduction techniques, and valuation contraction ahead of the NFL season.
Ravitch and Jeffrey Sine’s Raine Capital Joseph is the largest shareholder in the company, with 1,382,603 shares worth $52.77 million.
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