DraftKings is the IBD Stock Of The Day as the sports betting giant surged on an earnings beat-and-raise report. DraftKings stock vaulted past multiple early entries while flashing a bullish signal.
More generally, gaming stocks are seeing bets spike, fueled by Taylor Swift-Travis Kelce mania.
DraftKings Stock
Shares of DraftKings rocketed nearly 16.5% to 33.75 on the stock market today. DraftKings stock gapped up above the 50-day moving average and a trendline drawn from the Aug. 4 peak, providing an alternative entry at 31.10. DKNG stock also cleared a 32.65 entry and posted its best close since December 2021.
DKNG stock shows an official 34.49 consolidation buy point.
The relative strength line for DraftKings stock struck a high Friday, a positive sign ahead of a potential breakout. That is marked by a blue dot at the end of its RS line on the daily and weekly MarketSmith charts.
While DKNG stock was actionable Friday morning, at this point it looks extended from the 50-day moving average, as well as some of those early entries. Ideally, shares would pause, forging a handle before a breakout.
DraftKings has a Composite Rating of 77 out of 99. The Composite Rating combines various technical indicators into one easy-to-read score.
However, this gaming stock earns an RS Rating of 97 out of 99. That is up from 96 a week ago and up from 36 one year ago.
DraftKings Earnings
A mediocre EPS Rating of 68 reflects a short earnings history for this young, loss-making company.
Founded in 2011, DraftKings came public in 2020 via a blank-check merger deal.
On Friday, DraftKings earnings for the third quarter, revenue growth and user growth came in ahead of views. The Boston-based gaming company narrowed Q3 losses to 61 cents a share on a 57% revenue gain to $790 million.
Analysts on Wall Street were "positive on product execution, fourth straight quarter of market share improvement, traction behind business initiatives, and expense discipline," according to FactSet.
In fact, the company has been posting smaller year-over-year losses every quarter since Q2 2022.
Analysts expect the first annual profit in 2025.
Sales growth is slowing, though at robust levels. It ranged from 57% to 88% over the past four quarters.
On Friday, DraftKings also raised the midpoint of 2023 revenue guidance to $3.695 billion. It improved the midpoint of 2023 adjusted EBITDA guidance to negative $105 million.
"Our momentum from the third quarter has continued through October and the start of the 2023-2024 NBA season," CEO Jason Robins said in a letter to shareholders, explaining the hikes.
Further to that, multiple years of investment in products and technology to become a "a fully vertically integrated mobile sports betting operator" are now paying off, the chief executive said.
For fiscal 2024, DraftKings initiated revenue guidance of $4.5 billion-$4.8 billion and adjusted EBITDA guidance of $350 million-$450 million. That was well above analyst consensus, according to FactSet.
Taylor Swift-Travis Kelce Bets
On Oct. 11, FanDuel CEO Amy Howe said at a CNBC gaming conference in Las Vegas that bets on Kelce doubled since Swift came on the scene. The singer and Kansas City Chiefs player Kelce went public with their romance in September.
DraftKings CEO Robins echoed those views at the event. "There's more Kelce betting. That's for sure," he said.
"Just when you think she couldn't conquer anything else, she conquers the sports world too," Robins added.
On Nov. 2, Ticketmaster parent LiveNation[tickersymb=LYV] posted blowout earnings. That coincided with blockbuster tours from concert darlings Swift and Beyoncé, CNBC said.
This year, mutual funds have been piling into DraftKings stock amid stock market pullbacks, MarketSmith data shows. Year to date, DKNG stock has skyrocketed 196% off a low base.
