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DraftKings Holding Strong In Face Of New Sportsbook Rivals

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Posted on: December 15, 2023, 06:51h. 

Final up to date on: December 15, 2023, 09:06h.

The US sports activities wagering panorama is awash in new, well-heeled rivals, however DraftKings (NASDAQ: DKNG) isn’t feeling opposed results from these recent entrants.

DraftKings stock
A DraftKings billboard seems at Instances Sq. in New York Metropolis after the corporate went public in April 2020. An analyst says the operator is gaining iGaming and sports activities betting market share. (Picture: NASDAQ)

DraftKings and Flutter Leisure’s FanDuel quantity to a duopoly in US on-line sports activities betting, controlling greater than 70% of the market. Rivals consider they’ll pilfer a few of that share, and there’s proof to recommend Fanatics and Penn Leisure’s (NASDAQ: PENN) ESPN Guess are off to stable begins, however that’s but to be a headwind for DraftKings.

DraftKings cited no quick affect from the ESPN Guess launch, and sees potential for the providing to develop the market,” Stifel analyst Jeffrey Stantial wrote in a report back to shoppers.

The analyst not too long ago met with executives from the gaming firm. He charges the inventory “maintain” with a $40 worth goal, implying upside of 13.1% from right this moment’s shut at $35.35.

DraftKings Proving Resilient In opposition to ESPN Guess

Fanatics and ESPN Guess are the 2 most ballyhooed new entrants to the sports activities betting panorama, with the latter debuting final month. The reasoning is easy: The operators have the assets to compete with behemoths DraftKings and FanDuel.

As extra states have embraced regulated cellular sports activities wagering, some operators have opted towards profligate spending merely for buyer acquisition. In consequence, some gaming corporations scaled again US sports activities betting ambitions or left the market as a result of it grew to become tough to generate income after spending to realize mere market share scraps.

Fanataics and ESPN Guess may expertise totally different outcomes over the long run, and whereas the latter seems to be off to a quick begin, it’s not but been a drain on DraftKings within the states the place the operators compete towards one another.

“Encouragingly, DraftKings has seen little affect to their buyer base, noting comparable consumer churn & spending patterns throughout November and early December in states the place they compete towards ESPN Guess vs. states the place ESPN Guess just isn’t but stay,” added Stantial.

That might sign that ESPN Guess is taking share from different corporations or rising the general sports activities betting market.

iGaming, Product Improvement May Enhance DraftKings in 2024

Although the inventory declined this week, DraftKings has greater than tripled on a year-to-date foundation. Demanding traders are asking, “What’s subsequent?” that means there’s a burden on the operator to ship catalysts for market individuals to stay engaged with the inventory in 2024.

These embrace new product choices such because the Pick6 fantasy recreation and progressive parlays and gaining extra iGaming share, which may very well be aided by favorable legislative outcomes subsequent yr.

“We stay constructive on the basic outlook for DraftKings, as same-state on-line sports activities betting & iCasino progress stays wholesome, product combine drives web gaming income & margin upside, 2024 reveals promise for brand spanking new state laws, and DraftKings continues to display resilience to new competitors,” concluded Stantial. “Nonetheless, valuation is demanding, and we stay cautious on potential iCasino market share deconsolidation. Therefore we reiterate Maintain, although remaining opportunistic on pullbacks.”

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