DKNG - Breakout
One of the strongest names of this year. All signs point to a future multibagger.
Overbought on daily IMO, needs to cool down and test 5D EMA for next leg to 40.
No position yet.
D2KN34 trade ideas
The DraftKings Inc (DKNG): ExegesisDraftKings Inc (NASDAQ:DKNG) continues to expand its market presence with online sports betting now live in 21 states and iGaming in five states.
The company faces potential threats from regulatory changes and intense competition in the online gaming and sports betting industry.
DraftKings Inc (NASDAQ:DKNG) has opportunities for growth through strategic acquisitions and expansion into new markets.
Founded in 2012, DraftKings Inc (NASDAQ:DKNG) has grown from a daily fantasy sports innovator to a leading player in the online sports and casino gambling industry. As of November 3, 2023, the company's latest SEC 10-Q filing reveals a dynamic business landscape with a mix of strengths, weaknesses, opportunities, and threats. This SWOT analysis aims to provide a comprehensive understanding of DraftKings' current position and future prospects. The company's financial performance shows a steady increase in revenue, reflecting its successful customer acquisition and retention strategies.
Strengths
Market Presence: DraftKings Inc (NASDAQ:DKNG) has a strong market presence, with online sports betting live in 21 states and iGaming in five states. This wide reach gives the company a competitive edge and access to a large customer base. The company's robust customer acquisition and retention strategies have contributed to its revenue growth, as evidenced by the $1,049.2 million increase in revenue for the nine months ended September 30, 2023, compared to the same period in 2022.
Product Innovation: DraftKings Inc (NASDAQ:DKNG) has consistently demonstrated its ability to innovate and expand its product offerings. The company's portfolio now includes Sportsbook, iGaming, DFS, and other consumer products. This diversification not only enhances customer engagement but also provides multiple revenue streams for the company.
Price Momentum
DKNG is trading near the top of its 52-week range and above its 200-day simple moving average.
What does this mean?
Investors have been pushing the share price higher, and the stock still appears to have upward momentum. This is a positive sign for the stock's future value.
DKNG DraftKings Options Ahead of EarningsIf you haven`t bought the dip on DKNG here:
Then analyzing the options chain and the chart patterns of DKNG DraftKings prior to the earnings report this week,
I would consider purchasing the 30usd strike price Calls with
an expiration date of 2024-1-19,
for a premium of approximately $1.93.
If these options prove to be profitable prior to the earnings release, I would sell at least half of them.
Looking forward to read your opinion about it.
$DKNG Solid Revenue Growth Will Eventually Lead to ProfitabilityOn a YTD basis, DraftKings Inc. (Nasdaq: DKNG) is up nearly 145% due to a mix of solid financial results, raising its full-year guidance, and delivering its first quarter of adjusted EBITDA profitability in Q2. With that in mind, the company’s Q3 earnings report will drop on November 2nd where I expect it to beat analysts’ revenue and EPS estimates, all while raising its full-year guidance again. As is, the NFL season is underway which is a seasonal catalyst for the company since Football is the most popular sport for wagers. Now that the company has a clear path toward profitability, DKNG stock could be a smart buy ahead of its Q3 earnings.
DKNG Fundamentals
NFL Season Will Further Improve Performance
DraftKings has done a tremendous job this year growing its market share. According to data from last May, the online sportsbook dominated 32% of the market compared to 27.7% over the year prior. The significance of this growth is that it has been taking market share from its direct competitors.
The sportsbook’s biggest competitor is FanDuel which held a 45.1% market share back in May. That said, this figure represents a slight YoY decline from 45.5% which shows that DKNG is a growing force in this market. Other competitors also lost market share as BetMGM’s market share shrank from 11.1% to 9.9%, Caesars’ dropped from 6% to 5%, and Barstool’s declined from 2.6% to 1.9%.
What is more impressive is that DKNG was able to grow its market share at the same time its sales and marketing costs were declining. In Q2, the sportsbook’s sales and marketing costs decreased sequentially to $207.4 million from $389.1 million. At the same time, its revenues increased sequentially from $769.6 million to $874.9 million. The company achieving this feat is impressive considering the lack of highly followed sports events in Q2 except for the NBA playoffs.
With the NFL season underway, DKNG can continue growing its revenues at the same impressive rate due to the popularity of betting on the NFL. A recent survey by the American Gaming Association found that a record 73.5 million Americans plan to place bets on the NFL this season. This figure represents a nearly 60% increase from a year ago which shows how popular betting on the NFL is. As DraftKing holds the second-largest market share in online sports betting, it is safe to assume that a large number of these bettors will place their wagers through the company’s platform.
On that note, the first week of the NFL season indicates that the online sports betting industry may be in for a record season. GeoComply – a leading provider of location-based detection technology in the online sports betting industry – recorded 242.3 million geolocation transactions across regulated online sportsbook customers during week 1. This represents a 56% increase from the same period in 2022. Moreover, new research by the AGA found that the first week of the NFL saw 1.1 million new player accounts which is a 40% YoY increase.
The increase in sports betting volume can be due to 3 major markets experiencing their first start to the NFL season which are Maryland, Massachusetts, and Ohio. Across these markets, the new NFL season added 61 thousand new accounts in Maryland, 59 thousand in Massachusetts, as well as a staggering 133 thousand in Ohio.
In light of this, DKNG could stun Wall Street with a strong top-line and bottom-line beat considering that the NFL season started on September 7th. This means that the sportsbook received wagers on 49 games in Q3 spanning the first 3 weeks of the NFL season as well as week 4’s Thursday Night Football game.
Q3 Forecast
For its Q3 earnings, analysts expect DKNG to report revenue of $686.3 million and an EPS of -$0.69. That said, the online sportsbook may be poised to shatter these estimates as I’m forecasting its revenues to come at $924.9 million and its EPS to be -$0.53.
In the first 2 quarters of 2023, DKNG’s revenue increased YoY by 84.48% and 87.68%. As such, I’ve used the average YoY increase in the first 2 quarters to project its YoY revenue growth in Q3. Based on an 84.27% YoY increase, the sportsbook’s revenue would amount to $924.9 million.
Quarter Revenue YoY Growth
Q1 22 $417,205,000 33.60%
Q2 22 $466,185,000 56.65%
Q3 22 $501,938,000 135.85%
Q4 22 $855,133,000 80.67%
Q1 23 $769,652,000 84.48%
Q2 23 $874,927,000 87.68%
Q3 23 $924,940,032 84.27%
After projecting the company’s Q3 revenue, I expect its cost of revenue to be $583.2 million. In the Q2 earnings call, management raised its adjusted gross profit guidance from 42% – 45% to 43% – 45%. Considering that DKNG’s adjusted gross margin was 47% last quarter, I expect it to decline in Q3 in order to reach management’s expectations. As such, I used the average gross margin in Q1 and Q2 to reach the figure I’m projecting for the cost of revenue.
Quarter Revenue Cost of Revenue Gross Profit Gross Margin
Q1 23 $769,652,000 $521,740,000 $247,912,000 32.21%
Q2 23 $874,927,000 $510,323,000 $364,604,000 41.67%
Q3 23 $924,940,032 $583,251,338 $341,688,695 36.94%
As for sales and marketing expenses, there is an apparent trend in the company’s financials in the last 2 years of this cost increasing in Q3 compared to Q2. This spike could be due to the company increasing its marketing efforts ahead of the beginning of the NFL season. Based on this trend, I calculated the average Q3 QoQ growth rate in sales and marketing expenses which is 70.3%. At this rate, DKNG’s Q3 sales and marketing expenses would be $353.5 million.
Quarter Sales & Marketing QoQ Growth
Q1 21 $228,686,000
Q2 21 $170,712,000
Q3 21 $303,658,000 77.88%
Q4 21 $278,444,000
Q1 22 $321,452,000
Q2 22 $197,529,000
Q3 22 $321,714,000 62.87%
Q4 22 $345,282,000
Q1 23 $389,133,000
Q2 23 $207,487,000
Q3 23 $353,502,460 70.37%
Looking at the sportsbook’s product and technology costs, we can also find a pattern as the largest QoQ increase occurs in Q1 and is followed by smaller increases. Through this pattern, I calculated the average Q3 QoQ growth rate using data from the last 2 years to reach a projected Q3 growth rate of 1.48%. This would amount to $91.2 million in product and technology expenses.
Quarter Product & Tech QoQ Change
Q1 21 $56,159,000
Q2 21 $62,635,000 11.53%
Q3 21 $65,222,000 4.13%
Q4 21 $69,639,000 6.77%
Q1 22 $81,352,000 16.82%
Q2 22 $77,202,000 -5.10%
Q3 22 $76,299,000 -1.17%
Q4 22 $83,394,000 9.30%
Q1 23 $88,088,000 5.63%
Q2 23 $89,906,000 2.06%
Q3 23 $91,236,887 1.48%
The last operating expense remaining on DKNG’s income statement is G&A expense. This expense has been declining YoY since Q2 2022. With that in mind, these declines have been at a higher pace since Q4 2022. Therefore, I used the average YoY growth for the first 2 quarters of the year since they are better indicators of the company’s current performance. This means that I’m projecting G&A expense to decline 26.64% in Q3 which would amount to $136.6 million.
Quarter G&A YoY Growth
Q1 21 $168,997,000
Q2 21 $198,806,000
Q3 21 $219,706,000
Q4 21 $240,816,000
Q1 22 $216,606,000 28.17%
Q2 22 $187,609,000 -5.63%
Q3 22 $186,261,000 -15.22%
Q4 22 $173,244,000 -28.06%
Q1 23 $160,476,000 -25.91%
Q2 23 $136,256,000 -27.37%
Q3 23 $136,635,702 -26.64%
By subtracting these costs from the projected revenue of $924.9 million, we can estimate DKNG’s operating loss to be around $239.6 million.
Revenue $924,940,032
Cost of Revenue $583,251,338
Sales & Marketing $353,502,460
Product & Tech $91,236,887
G&A $136,635,702
Operating Loss -$239,686,354
For the rest of DKNG’s expenses, I used the average of the first 2 quarters given that they are better indicators of the company’s position at the moment. In this way, I’m projecting net interest income, remeasurement of warrant liabilities, other income, income tax provisions, and equity method investments to be $11.9 million, $18.5 million, $32 thousand, $1 million, and $221 thousand, respectively.
Quarter Net Interest Remeasure. of Warrant Liab. Other Income/Expense Income Tax Equity Method Inv.
Q1 23 $11,140,000 -$17,035,000 $19,000 $1,368,000 $119,000
Q2 23 $12,745,000 -$20,041,000 $45,000 $651,000 $323,000
Q3 23 $11,942,500 -$18,538,000 $32,000 $1,009,500 $221,000
Adding all of these figures together, we can reach my estimate for DKNG’s Q3 net loss of $247.4 million. With more than 463.9 million shares outstanding, this would amount to an EPS of -$0.533 – less than analysts’ estimate of -$0.699.
Revenue $924,940,032
Cost of Revenue $583,251,338
Sales & Marketing $353,502,460
Product & Tech $91,236,887
G&A $136,635,702
Operating Loss -$239,686,354
Net Interest Income $11,942,500
Remeasure. of Warrant Liab. -$18,538,000
Other Income $32,000
Income Tax $1,009,500
Equity Method Inv. $221,000
Net Loss -$247,480,354
OS 463,974,787
EPS -$0.533
Risks
While DKNG’s stock outlook appears to be bullish, there is a risk to the bull thesis. With interest rates at multi-decade highs, analysts expect consumer spending to slow down due to several factors including the resumption of student loan repayments, dwindling savings accounts, and banks tightening their lending standards. As such, bettors may reduce their wages in order to save funds which would impact DKNG’s revenue growth.
Technical Analysis
Looking at the hourly chart, DKNG stock is in a bearish trend with the stock trading in a downward channel. Looking at the indicators, the stock is below the 200 and 50 MAs which is a bearish sign, however, it recently broke through the 21 MA which could be an indication of a reversal soon. Meanwhile, the RSI is neutral at 49 and the MACD recently had a bearish crossover.
As for the fundamentals, DKNG is set to share its Q3 financial results today, November 2nd, after market close. Considering the success of the early weeks of the NFL season whose impact should be reflected in Q3, the sportsbook may be on track to deliver a strong earnings beat while raising its full-year guidance. With the stock trading near support, bullish investors could find the current PPS a lucrative entry point.
DKNG Forecast
While DKNG stock being up nearly 150% YTD may lead some to believe that it’s overvalued, this is farther from the truth. The online sportsbook has been performing exceptionally so far this year as seen by its declining costs and growing revenues. With the company releasing its Q3 earnings on November 2nd, I expect it to beat analysts’ estimates for revenue and EPS for the fourth consecutive quarter while raising its full-year guidance due to the anticipated revenue growth. This growth will be mainly driven by the NFL season which is the most popular sport for bettors. With a clear path toward profitability due to revenue growth and more efficient cost management, DKNG stock could be a profitable long-term investment.
Bullish at $24 level 61.8 fib and BB support on the weekly at 24.03 Looking to long there if it gets down there. Trading in a triangle currently which leads me to believe we could see a false breakdown. Hopefully with seasonality this can sky rocket.
DKNG - Short Idea - Who is betting in this Economy ?DKNG usually hot stock for the NFL season but considering the inflation and the economy we are in right now, my assumption would be not many betting.
If the Trend Line breaks, Target #1 - 25; Target #2 - 20
DKNG FLIP BEARISHHere is a simple trend-line break but put into price action terminology this is a break below bullish gap- lows with a intraday retracement to potential Lower Highs (PLH). Can expect a move back down following momentum back to previous Higher Lows (HL) and further
DKNG 1H BULLISH FLAGHere is a bull flag on the 1H timeframe and if you look closely there is also somewhat of an inverse head and shoulders forming signaling equilibrium between buyers and sellers. Expect imbalance next to either direction but according to the trend there is a higher change of a push to the upside once imbalance is created.
DKNG Inside Bar CALL side.Here is a 4h Inside bar on DKNG with a Macro trend line to support bullish bias. Be warned this trade can break below the inside bar and trigger a sell of creating another leg down. Watch for micro pull backs(5m-10m) after green level is broken for entry opportunities.
CAUTION: This trade CAN takeoff at open giving no pull back entry opportunity so do NOT let fomo give you an entry with no idea of R:R.
DKNG rising wedgeThis one is still playing out. I think it may attempt to make one more high on the daily tf. Put volume is increasing. I have it on my watchlist.
DKNG 100%+ CALL opportunity Here is a simple break and retest if a key breakout level/zone aka resistance flipped to support. This can be a day trade but for max gain would highly recommend swinging $32c into friday.
DKNG: Heading into NFL seasonWe'll see if DKNG can remain consistent off 30 and provide any meaningful lift heading into the NFL season.
DKNG momentum reversal.Ugly H&S within an uptrend above weekly candle pattern breakout. Will be a nice swing opportunity and for paper handers, can be a 2 day hold for 100%+, trim at or near highs and leave runners after.
I am also bullish on DKNG in near termif market continues to stay strong and consumer spending looks good dkng can continue to build.
Not posting any ideas as advice but rather as accountability for my own read on market
$DKNG Rocky Mountains Ahead?Rocky Mountains is not a real thing, but it was the first term to come to mind when looking at this pattern.
If this plays out, it would take weeks to months before anything comes of it. Simply charting this to reflect back on in the future to see what this pattern reveals. I'm simply playing hidden bullish divergence here, especially considering the fed with today's semi-hawkish tone out in Jackson Hole.
Choppiness with potential to trade highs and lows.
High Volatility = High Premium = High Risk = High Potential Wins = High Potential Losses.
DKNG - potential entry above 26.90DKNG has corrected back to a possible near term resistence-turned-support @ 26.50 - 26.80.
Currently the bullish divergence between it's price and RSI is still intact (will be negated if price dips below its last pivot of 24.95).
I would consider to test a long entry for DKNS if it starts to go above the last candle high of 26.89 with an initial SL just slightly below its last pivot low of 24.95.
As swing trader, I will be trailing my stops on the way up should the trade works out.
Disclaimer: Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is important! Take care and Good Luck!
$DKNG - Is the pullback done?NASDAQ:DKNG DraftKings could see a trendline check-back within an uptrend channel. It is currently sitting on the 50-day moving average and a Fibonacci support level.
If the trend line fails to hold and the price falls below $25.60, we could see a further pullback.
The $25.60 area should provide good support.
Watch these price levels for potential support and reversal:
- $25.60 to $26
- $23
- $21.71 (gap close)
I will update the chart when there is a potential reversal.
Possible Cup and Handle on DKNGThe cup has formed over a long period of time and price is coming into an area of resistance ($26 - 27). A pull back to 20 ish would be expected with a larger pull back to half the cup distance.
Not financial advice.
Looking for a break of support for DKNGVolume profile shows area or support.
Watching for support to break at $28 then targeting $26 area
DraftKings to go lower?DKNG met a long monthly down trend after a 250% rally from its lows and closed with what looks like a reversal pattern on the daily chart.
Weekly THV is flat and Red as pricing continued to climb into the trend creating bearish divergence.
Does Draft kings head back to $20 to meet the weekly coral or will it break out and head to $40? Time will tell.
I'm personally shorting this. I explain why in the video. Covering both technical and social confluence and what I look for.
DraftKings DKNG wants to move up
I have been watching this stock for a while and they just had great earnings.
PENN announcement has spooked people but the fundamentals of the stock, price targets all say another thing.
I see a quick return to $30+ following the support line for buying opportunities.
Expectation: $36.00-$36.50 short term
KalaGhazi | DraftkingsShares have been on fire. You want to own this heading into football season. It was upgraded today. The CEO is delivering.
8/7: DKNG Golden Pocket ShortHad a nice call on DKNG earnings last week and now I think a golden pocket short is lining up. Entries around $33 to get us back under $30 seems like a good setup.
