3. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 28
DraftKings Inc. (NASDAQ:DKNG) is a fantasy sports and sports betting company, headquartered in Boston, Massachusetts. DraftKings Inc. (NASDAQ:DKNG) allows users to enter into fantasy sports contests, where they can win money based on the actual performance of professional players from the major American leagues, including the NFL, Premier League, UEFA Champions League, and NASCAR racing, among others.
In addition to sports betting, DraftKings Inc. (NASDAQ:DKNG) has a digital marketplace that is dedicated to non-fungible tokens of sports legends, including Tom Brady, Simone Biles, Tiger Woods, and Usain Bolt. The first collection of DraftKings Inc. (NASDAQ:DKNG) NFTs dropped on August 11. On December 7, the company announced that it is launching pro football gamified NFT collections, licensed from the NFL Players Association.
Truist analyst Barry Jonas lowered the price target on DraftKings Inc. (NASDAQ:DKNG) to $30 from $50 and kept a Hold rating on the shares as part of a broader research note previewing the 2022 U.S. gaming sector on January 13. For DraftKings Inc. (NASDAQ:DKNG), the analyst notes that while the company is a best-in-class pure-play online operator, sentiment has turned negative from rising interest and tax rates.
Cathie Wood purchased 266,000 DraftKings Inc. (NASDAQ:DKNG) shares on January 11, which elevated her total stake in the company to 17.5 million shares, worth $844.4 million. Cathie Wood’s ARK Investment Management is the largest stakeholder of DraftKings Inc. (NASDAQ:DKNG) from the 28 funds that were bullish on the stock in the third quarter of 2021.
Here is what Alger has to say about DraftKings Inc. (NASDAQ:DKNG) in its Q2 2021 investor letter:
“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. The company’s third offering, Online Casino (iGaming), involves customers betting real money when playing casino games like slots and blackjack online.
DFS is legal in most states, while approximately 25% of the country’s population has access to OSB and approximately 10% has access to iGaming. Within a year, we expect approximately 40% or more of the population to have access to OSB as legalization moves rapidly.
The company reported a strong quarter, with revenues exceeding expectations by more than 30%. We think the stock underperformed due to the time period between the conclusion of March Madness and the start of the NFL season being a weaker betting period and concerns about more intense competition. Concerns around tough comps have also hindered performance of DraftKings shares. We note that monthly state data continues to be robust, showing no signs of slowing from reopening. We also believe DraftKings is increasing its potential to gain market share by moving its tech-platform to SBTech, which is a sports betting platform the company acquired as part of a SPAC deal. Legalization of sports betting by states has also been robust.”
