In this article, we will be looking at the 5 best casino stocks to Invest In. If you want to see our detailed analysis of the casino industry, you can go directly to the 15 Best Casino Stocks to Invest In.
5. DraftKings Inc. (NASDAQ: DKNG)
Number of Hedge Fund Holders: 43
DraftKings Inc. (NASDAQ: DKNG) is an online casino and sports-betting operator. The company is the first legal sports betting operator in New Jersey and also has operations in West Virginia, Pennsylvania, and Indiana. It offers its customers daily sports contests to win money and benefits. The company ranks fifth on our list of the best casino stocks to invest in.
In Q1 2021, DraftKings Inc. (NASDAQ: DKNG) beat on revenue. The company reported a 175% year-over-year revenue growth at $312 million, driven by new launches in Michigan and Virginia. 1.5 million monthly unique paying customers engaged with the company in the first quarter. The average revenue per monthly unique paying customer increased by 48% at $61, compared with the prior-year quarter. Due to the strong earnings, DraftKings Inc. (NASDAQ: DKNG) raised its guidance for the fiscal year 2021 to $1.05 billion-$1.15 billion. The company also expects the resumption of normal sports activities. The DKNG stock gained over 51.3% in the past year. In June, Jeffries raised its price target on DKNG stock, rating it as a ‘Buy’.
At the end of Q1 2021, 43 hedge funds have stakes in DraftKings Inc. (NASDAQ: DKNG), worth $966 million. ARK Investment Management is the biggest shareholder of the company with 4.3 million shares, worth $268.3 million.
Alger, an investment management firm, released its Q1 2021 investor letter and mentioned DraftKings Inc. (NASDAQ: DKNG) in it. Here is what the firm has to say:
“DraftKings Inc. was among the top contributors to performance. DraftKings is an online gaming operator. Its legacy Daily Fantasy Sports (DFS) allows users to virtually draft teams of players from professional sports leagues and potentially earn a payout based on how athletes perform. DraftKings Online Sports Betting (OSB) involves the company taking wagers or bets from customers on sporting events. Draft Kings’ third offering, Online Casino (iGaming), involves customers betting real money when playing casino games like slots and blackjack online. DFS is legal across most states, while approximately 25% of the population has access to OSB and approximately 10% has access to iGaming.
DraftKings recently hosted a bullish analyst day during which it increased its total addressable market estimate to approximately $65 billion if OSB and iGaming become legal in all states. At the same time, it raised its long-term revenue estimate to $5.4 billion and earnings before interest, taxes, depreciation and amortization to $1.78, an approximately 40% increase for both. It also discussed very strong customer retention. We believe DraftKings continues to be a great executor of its business strategy and it beat consensus revenues by nearly 40% for its most recent quarter. Online gaming is a very exciting market, and the monthly state numbers show that iGaming and OSB revenues/wagers continue to be very robust. Additionally,
DraftKings’ market share is strong with OSB and iGaming representing approximately 30%and 20%, respectively, of their markets. The potential for Canada and various U.S. states such as New York, Connecticut and Ohio to legalize sports betting over the coming months could result in a multi-billion dollar revenue market.”
