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Why DraftKings Stock Is One to Buy After ESPN Deal

DKNG) stock was trading well. Shares were climbing despite the overall market — and tech stocks specifically — taking a painful slide. Because of that strength last week, DraftKings stock was on a lot of investors’ radar coming into this week.” data-reactid=”12″>Last week, DraftKings (NASDAQ:DKNG) stock was trading well. Shares were climbing despite the overall market — and tech stocks specifically — taking a painful slide. Because of that strength last week, DraftKings stock was on a lot of investors’ radar coming into this week.

DraftKings (DKNG) logo on a phone

Source: Lori Butcher / Shutterstock.com

What many weren’t expecting, though, was such a sudden burst higher. Of course, that didn’t come because of traders grabbing the first thing they could find and jamming it higher. Instead, it came on a very important partnership for DraftKings.

DIS) ESPN. The multi-year deal will allow ESPN to become “the exclusive daily fantasy sports provider and co-exclusive sportsbook link-out provider.”” data-reactid=”30″>The company formed a partnership with Disney’s (NYSE:DIS) ESPN. The multi-year deal will allow ESPN to become “the exclusive daily fantasy sports provider and co-exclusive sportsbook link-out provider.”

InvestorPlace – Stock Market News, Stock Advice & Trading Tips” data-reactid=”31″>InvestorPlace – Stock Market News, Stock Advice & Trading Tips

Disney has about a 6% stake in DraftKings.

DraftKings Gaining Momentum

The deal with ESPN is not necessarily the make-or-break for the company. However, it’s one more catalyst to help drive the company’s results forward. Overall, though, other waves are here, too.

Consider this: In the second quarter, we had a major shut down in the sports worlds. No March Madness, no NBA or NHL playoffs and a delay to Major League Baseball, among others.

Big Ten conference is rejoining the fray.

21 states have legalized sports betting, 14 of which are now approved for online. Of those 14, nine states are currently live, seven of which DraftKings is live in as well. Now, almost just as many states (19) have active mobile legislation on the table.

So, will all 50 states immediately green-light online sports gambling? No. Like cannabis, though, we are moving in the right direction — and eventually, DraftKings will be able to capitalize. In turn, this provides both short- and long-term catalysts as states join the list of online sports gambling over time.

joined the board as a special advisor and as an investor. That said, Jordan brings legitimacy to the business, and both his brand and guidance should help as well.

Collectively, all of these things combine to make DraftKings stock quite attractive moving forward.

Why DraftKings Stock Is a Buy on a Dip

For what it’s worth, the analysts love the recent move with ESPN. In fact, Oppenheimer and Jefferies upped their price target to $55. Benchmark increased its price target to $57, while Evercore and Craig-Hallum each assigned a $60 target. 

sales grew 23.6% year-over-year. With that in mind, this was for the April, May and June period. So at a time when sports were at a near standstill, DraftKings still found a way to grow significantly. 

more than 40% in 2021 and top $750 million. 

That figure could prove conservative should DraftKings continue to make some of the impressive moves that it has made in the last month. That’s also as analysts haven’t yet had time to factor in the new ESPN deal. Finally, it could prove conservative simply because more states are legalizing sports betting and as Q1 and Q2 should have a powerful comparable in 2021 given the lockdown effects of 2020. 

$1.2 billion in cash and no debt. 

But despite all that, this stock isn’t cheap. With a $19.7 billion market capitalization and expectations for just over $500 million in sales this year, DraftKings stock is a little pricey. It’s not yet profitable or cash flow positive, either.

As a result, let’s wait for a pullback — then pounce. 

Click here to see what Matt has up his sleeve now.

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