DraftKings Stock Rebounds on Planned Expansion Into New Jurisdiction
Sports betting is one of the hottest trends in the U.S right now, and with DraftKings just announcing plans to expand into a new jurisdiction, shares of its stock are on the rebound.
Nearly every sporting event and sports talk show is now talking openly about sports betting, even going so far as to make betting suggestions based on the odds. While such discussions on live television were unthinkable only a few years ago, it seems perfectly normal, even expected, today.
This discussion on sports betting is, of course, a scheme meant to get more and more people signing up for sports betting apps. This is why you see sports betting companies sponsoring sporting events and sports shows. Anyone who has watched ESPN recently has no doubt heard the name DraftKings (NASDAQ: DKNG), the exclusive provider of daily fantasy sports for the worldwide leader in sports.
DraftKings has been expanding rapidly across the U.S. as more and more states legalize sports betting. The company currently operates in 17 states, the most of any sports betting company and accounts for 36% of the U.S. population. In Q4 2021, DraftKings accounted for 28% of online sports bets in the U.S. while bringing in 24% of online sports betting revenue.
Earlier this week, DraftKings announced that it would be expanding the brand into Puerto Rico, which has a population of 3.2 million. The company will launch its online sports betting and daily fantasy product across the island while also partnering with the Mashantucket Pequot Tribal Nation and acclaimed casino operator Foxwoods to open a DraftKings-branded sportsbook at the recently reopened Foxwoods El San Juan Casino. The sportsbook will feature two ticket windows and six betting kiosks.
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DraftKings President of North America and co-founder Matt Kalish commented on the announcement, stating:
“Since establishing our relationship with the Mashantucket Pequot Tribal Nation and Foxwoods more than a year ago, we’ve seen immense success, which can be attributed to the collaborative efforts between the organizations and shared vision for providing customers with the very best. Puerto Rico is known for its rich and vibrant sports culture, and we look forward to being able to provide fans with a safe and legal form of sports betting through our retail and online sportsbooks.”
DraftKings shares surged by over 10% on the day of the announcement but have since given back those gains and then some. This continues the volatility trend that has plagued the stock since its IPO in 2019. With the company still operating in the red, thanks mainly to expansion costs, investors seem to be waiting for it to turn a corner on profitability. After three years of hype, the company is now in “prove it” territory.
Shares of DraftKings closed Monday’s trading session at $16.87 per share, up 2.99% on the day. YTD DKNG stock is down 39.25%.
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Disclaimer: Wealthy VC does not hold a position in any of the stocks, ETFs or cryptocurrencies mentioned in this article.
