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The company DraftKings specializes on sports betting across major sport platforms such as the NFL, NBA, MLB, and others. DraftKings is a relatively new player in the stock market as they only became a public company in April 2020. After struggling early on as a company and a stock, DraftKings has shown considerable stability in the stock market. DraftKings benefitted hugely from an important Supreme Court Case in 2018 that lifted federal bans on sports gambling and have continued to grow as a company since then as they currently have a 60% hold on the sports betting market.
In 2020, DraftKings was set to become public in April. However, the company’s plans did not reflect a typical Initial Public Offering(IPO) for a company. The company opened in a high-risk but high-reward way in closing a $3.3 billion deal in order to trade on the NASDAQ Global Select Market under the ticker symbol, DKNG. On the opening day of this news, the company soared up 18.3%, and by the end of the trading week, up an additional 10%. The risk of the merger had paid off verses a traditional IPO, which wouldn’t have given DraftKings the instant popularity and publicity that it had received.
DraftKings plans to go public happened to occur right in the heart of the COVID-19 havoc on the market. However, the NASDAQ, which was the sector of the market Draftkings was a part of, was only down 5% at the time of the merger. The overall market was down over 13%. This allowed DraftKings to avoid serious damage to their company and allowed for high growth potential in the future.
In the months following the initial merger news, DraftKings has made a remarkable wave in the market. DraftKings has soared from the price of $20.12 on May 1st, 2020, to $59.30 as of September 30th, which is up almost 300%, vastly outgaining the general market(up around 10%). This is largely in part to the gradual return of sports. The initial return of the NBA and MLB certainly helped increase sports betting on DraftKings when both sports returned in late July. The return of football has no doubt been the most influential in the rise of DraftKings stock price. Football accounts for roughly 48% of the revenue DraftKings pulls in each year. Since the return of football, the stock has risen about 65% and will likely continue to do so as long as the season played as scheduled.
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DraftKings has a strong stake in the sports betting market and will most likely retain their hold with their innovative betting systems. From player lineups, the Vegas odd betting, to stacking teams, DraftKings is seen as a gamechanger in the online betting world. As laws across states regarding betting services such as DraftKings are relaxed, the company will look to expand through more states and expand their hold on sports betting, thus increasing the strength of the company and the stock for years to come.
It’s crazy to think that this company only became a public company last April. This company seems to have faced great feats, and I think that is something inspirational to all. In terms of Covid, I can’t even imagine what happened to this business, for it is solely based off of sports. It is a great thing that the NFL has started its season, for it could help make up for the revenue lost during those seasons that were unfortunately slower due to the pandemic. The craziest thing about the pandemic is that it really affects all businesses, though sometimes we don’t realize it initially.
I think that this is another extremely well-put analysis on the rise of DraftKings. You really have a way of highlighting the statistics involved in these topics. It is actually remarkable how much they have grown in correspondence with this pandemic..
I see the Draft Kings commercial everywhere, but honestly never really thought of them as an actual company. Your other posts have been about companies that have been around on the stock market for a decent amount of time, but this one is interesting because it is so new. Who knows if it’ll have a similar rollercoaster ride like the other stocks that you have described in other posts.
Draft Kings is actually something I have some experience with, as me and my roommates are constantly betting on it. It is a nice intermediate step between regular fantasy football and plain out betting on games. There is a lot of skill behind it, but a good amount of luck too. I can only imagine the stock will continue to rise as more and more sports seasons are resumed and people are reminded for their love of the games.