Why DraftKings Stock Rose Today

(The Motley Fool) – What happened: Shares of DraftKings (NASDAQ:DKNG) climbed 3.7% on Monday as analysts lauded the fantasy sports and betting platform’s growth prospects.

So what
Credit Suisse analyst Benjamin Chaiken placed an “outperform” rating and $76 target price on DraftKings’ stock. If he’s right, shareholders will enjoy returns of more than 50% based on the stock’s current price near $50.

Chaiken sees the pace of legalization accelerating in the U.S. as more states turn to sports betting to raise tax revenue during the coronavirus pandemic. He believes DraftKings’ recent marketing deals with the likes of Walt Disney’s ESPN, the New York Giants, and the Chicago Cubs will help it increase its share of this rapidly expanding market.

Now what
The U.S. online sports betting and gambling industry could eventually generate annual sales as high as $58 billion, according to investment bank Needham. As a pure-play online sports betting company, DraftKings’ stock gives investors an intriguing way to profit from the industry’s surging growth.

To accelerate its expansion, DraftKings has raised capital via stock sales. With its now cash-rich balance sheet, the company has the funds it needs to invest aggressively in its customer acquisition initiatives. It’s a wise move, considering the massive opportunity before it — and one that could pay off handsomely for investors if it helps position DraftKings as the online betting leader in the years ahead.

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