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 and Flutter Leisure’s FanDuel quantity to a duopoly in US on-line sports activities betting, controlling greater than 70% of the market. Rivals imagine 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 fast impression 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 purchasers.
The analyst not too long ago met with executives from the gaming firm. He charges the inventory “maintain” with a $40 value goal, implying upside of 13.1% from as we speak’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 straightforward: The operators have the sources to compete with behemoths DraftKings and FanDuel.
As extra states have embraced regulated cellular sports activities wagering, some operators have opted in opposition to profligate spending merely for buyer acquisition. Because of this, some gaming firms 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 might 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 in opposition to one another.
“Encouragingly, DraftKings has seen little impression to their buyer base, noting comparable person churn & spending patterns throughout November and early December in states the place they compete in opposition to ESPN Guess vs. states the place ESPN Guess isn’t but reside,” added Stantial.
That might sign that ESPN Guess is taking share from different firms or rising the general sports activities betting market.
iGaming, Product Growth May Enhance DraftKings in 2024
Although the inventory declined this week, DraftKings has greater than tripled on a year-to-date foundation. Demanding buyers 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 embody new product choices such because the Pick6 fantasy sport and progressive parlays and gaining extra iGaming share, which might be aided by favorable legislative outcomes subsequent 12 months.
“We stay constructive on the basic outlook for DraftKings, as same-state on-line sports activities betting & iCasino progress stays wholesome, product combine drives internet gaming income & margin upside, 2024 reveals promise for brand spanking new state laws, and DraftKings continues to show 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.”
