- Should you buy DraftKings stock (NASDAQ: DKNG) now? Here is some information to help you decide.
Today, the stock price of DraftKings Inc (NASDAQ: DKNG) soared over 17% after the company announced a deal with ESPN. The multi-year agreement with ESPN involves becoming a co-exclusive sportsbook link-out provider and exclusive daily fantasy sports provider of the media company. And links across ESPN digital platforms will connect fans to DraftKings’ products and services.
“ESPN helped revolutionize the 24/7 sports news cycle and continues to be the go-to source for many fans today on the latest and largest sports stories,” said Jason Robins, Co-Founder, Chairman, and Chief Executive Officer of DraftKings. “We look forward to this collaboration to exclusively showcase DraftKings’ daily fantasy content and offerings while also advancing further visibility and mainstream adoption of our regulated sports betting products.”
As part of the agreement, DraftKings will be able to integrate its products and offerings across ESPN’s digital platforms. And DraftKings will also power existing and future ESPN studio shows with dedicated segments for promotion, starting with daily fantasy sports.
“Sports betting is quickly becoming endemic to the overall experience of the sports fan,” added Mark Walker, Senior Vice President of Business Development & Innovation at ESPN. “To us, that means greater opportunities to innovate and deliver the best and most seamless experience for fans, which will ultimately expand ESPN’s brand and audience and increase engagement. It is an industry that we will continue to actively pursue as it grows and evolves.”
When Did DraftKings Go Public?
In April 2020, DraftKings had completed a reverse merger valued at $3.3 billion, which made it a publicly traded company. This merger involved Diamond Eagle Acquisition Corporation, a special-purpose acquisition company (SPAC) that went public in May 2019 as well as SBTech Global Ltd., a Europe-based company providing technology solutions for sports betting businesses. The combined company kept both DraftKings’ name and its executive management. And on April 24, 2020, the company’s shares started trading on the Nasdaq stock exchange under the ticker symbol “DKNG.” Earlier this month, I reported that Michael Jordan was also joining DraftKings as an advisor.
DraftKings Inc (NASDAQ: DKNG) Stock Performance:
This is how the DraftKings stock has performed over certain periods of time:
Since April 24, 2020 IPO ($19.35 per share): Up over 150%
DraftKings Inc (NASDAQ: DKNG): Should I Buy It Now?
Following the announcement of the ESPN partnership, Evercore ISI analyst Kevin Rippey published a note saying that it will increase brand awareness and help DraftKings acquire users.
“We’re not clear on the deal specifics, but given our expectation that DKNG will spend (more than $1 billion) in external marketing between now and 2023, even marginal savings by way of partnerships can add up to material dollars,” wrote Rippey via Barrons. And Jefferies analyst David Katz has a Buy rating on DraftKings.
In a recent analyst consensus report, I am seeing that 3 analysts are saying strong buy; 7 are saying buy; 5 are neutral; 0 are sell; and 0 are strong sell.
Currently, I have an extremely small position of DraftKings in my portfolio since I was apprehensive about how a sports better operator would do on the public markets. But clearly DraftKings has proven me wrong. I plan to gradually keep increasing my position at various price points in DraftKings going forward using a conservative buy-and-hold strategy.
Disclosure: I own a few DKNG shares. I wrote this article myself and I do not have any business relationship with any company whose stock I write about. I am not a financial advisor and all articles are my opinion. You should do your own due diligence and consider talking to a financial professional before investing.