Is Draftkings Stock a Buy?

Is Draftkings Stock a Buy?
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Is Draftkings stock a buy? With everyone staying at home and sports being shut down, it’s a surprise that Draftkings has risen as much as it has of late. With more and more states legalizing sports betting, people are starting to see the long term potential in it. Let’s dig in and see if Draftkings stock is a buy or not. Symbol DKNG

What is Draftkings?

Courtesy Wikipedia

Draftkings was founded in 2012 by CEO Jason Robins. As recent as 2018 they have expanded into the sports betting space. Customers are able to place a variety of bets, including live in-game betting, odds boosts, prop bets, post futures bets, and market specials for most major U.S. and international sports.

The Good

During the pandemic, Draftkings has found creative ways to generate revenue. Their igaming has been a hit and they have seen demand in eSports betting. They have opened betting pools for TV shows such as survivor and The Last Dance, as well as pools for political debates. They have opened up five more states this year to legalize gambling. Revenue rose 30% from $88 million from $68 million. Before the pandemic, Draftkings Sportsbook, which opened up in 2018 was starting to take off. Draftkings has been aggressive in investing in product and technology to improve live betting, They also generated $24 million in revenue from their recently acquired SBTech.

Courtesy Wikipedia

The Bad 

Draftkings still isn’t legal in every state. They’re constantly having to talk with legislature in each state on legalization. Most importantly, they’re not turning a profit yet. They reported a net loss of $68 million. In their conference call they bragged of half a million dollars on their balance sheet. But their balance sheet also shows $400 million in liabilities. 

Conclusion

Draftkings has some serious potential. They could be a very good speculative stock in your portfolio. Will I invest in them? No. I don’t invest in unprofitable companies. And the legal and political part of this industry is just too much of a headache for me. 

Check Out My Top 5 Stocks to Buy and Hold!

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