Investors who bought stocks during the COVID-19 market crash in 2020 have generally experienced some big gains in the past two years. But there is no question some big-name stocks performed better than others since the pandemic bottom.
DraftKings’ Bumpy Road: One company that has been an exciting investment in the last two years has been U.S. sports betting and iGaming company Draftkings Inc (NASDAQ: DKNG.
Unlike many other companies, the COVID-19 pandemic didn’t hurt DraftKings’s business. In fact, economic shutdowns around the world facilitated a broad shift from casino gambling to online gambling and sports betting.
The combination of limited real-world entertainment options and multiple government stimulus payments created a perfect storm for online gambling in 2020. The states of Illinois, Michigan, Montana, Colorado and Tennessee all launched online sport betting throughout the year in 2020.
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DraftKings completed a merger with special purpose acquisition company Diamond Eagle Acquisition Corp in April 2020. The stock finished its first day of trading on the Nasdaq up 10.1% to close at $19.35 after hitting its post-merger 2020 low of $17.60 in intraday trading.
DraftKings shares climbed as high as $44.79 in early June 2020 before spending the next three months consolidating. The stock pulled back to $27.54 in July, but was back making new highs again in mid-September.
DraftKings shares topped out at $64.19 in early October 2020, but then dropped back down to $34.90 later that month. The October sell-off was driven in large part by the company selling 32 million shares of stock on October 7 at a price of $52, a significant discount to the stock’s closing price of $56.79 on the previous day.
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DraftKings In 2022, Beyond: DraftKings ultimately made it to a new all-time high of $74.38 in March 2021, but rising competition and excessive cash burn has weighed on investor sentiment in the past year. The stock hit a new all-time low of $9.77 in March 2022 before bouncing back to around $18.40 today.
The stock jumped 12.5% on Friday after the company reported its monthly unique paid user count and its revenue per payer both increased by 30% year-over-year in the second quarter. DraftKings also raised its full-year revenue guidance to a new range of between $2.08 billion and $2.18 billion.
New states and new markets will continue to open up opportunities for DraftKings in the years ahead, but investors may need to see progress on the profitability front at some point to regain their enthusiasm for the stock.
Investors who bought DraftKings stock the day it hit its 2020 pandemic low and held on have little to show for their patience at this point. In fact, $1,000 in DraftKings stock bought on April 24, 2020, would be worth about $947 today.
Looking ahead, analysts are expecting DraftKings stock to rebound in the next 12 months. The average price target among the 28 analysts covering the stock is $24.50, suggesting 34.2% upside from current levels.
Photo: Courtesy of World Poker Tour on flickr
Image and article originally from www.benzinga.com. Read the original article here.