Shares in sports betting company DraftKings (DKNG) have exploded by an incredible 237% since its Nasdaq debut in April. So it’s perhaps not surprising that insiders have taken advantage of this rally as quickly as possible. Although the extent to which the stock has been offloaded is still eyebrow-raising- with a whopping $596 million-worth of shares sold on June 23, according to a June 25 filing.
Most notably, co-founder Paul Liberman has just sold $31 million worth of DKNG stock, leaving him with a $15 million holding. Robins Jason sold $70 million of DraftKings stock, while director Hany Nada sold off $37 million. Director Steven Joseph Murray made a $40 million share sale, with directors Shalom Meckenzie and John Salter each selling shares worth over $125 million. SBTech founder Meckenzie still owns over $1 billion in DKNG stock following the transaction- giving him a holding of over 10% in the company.
On June 17 Oppenheimer analyst Jed Kelly reiterated his buy rating on the stock with a $48 price target (33% upside potential). According to Kelly, DKNG is taking advantage of favorable market conditions to shore up its balance sheet ahead of more states regulating OSB/ iGaming.
He currently forecasts DKNG spending ~$876M on sales and marketing over the next three years, which means the company could be looking at potential acquisition/ investment opportunities. This could be in a media partnership similar to PENN/Barstool or opportunities in emerging products such as eSports.
“We believe upside is being driven by higher iGaming revenue and pentup demand for sports betting as live events (UFC/NASCAR/golf) gradually return” the analyst wrote.
Meanwhile Rosenblatt analyst Bernie McTernan has just initiated coverage with a buy rating and bullish $60 price target (66% upside potential).The analyst stated, “As the gambling industry in the US is emerging we believe online players will take the dominant share and DKNG should be a leader.”
He believes near-term catalysts to own the stock now are the return of live sports and the potential acceleration of gambling legislation from COVID-19. “In our bull case, we believe the stock can triple” McTernan concludes.
Overall, DraftKings scores 9 Buy ratings versus 1 Hold rating adding up to a Strong Buy analyst consensus. The $47 average price target implies 29% upside potential in the shares over the coming year. (See DraftKings stock analysis on TipRanks).
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