Positivity is at a premium for DraftKings (NASDAQ:DKNG), but sentiment could follow shifty for the amend on the beleaguered gaming stock.
That’s according to Jefferies psychoanalyst Jacques Louis David Katz who came out from recent meetings with DraftKings senior management somewhat offbeat on the shares. He reiterates a “buy” rating and $33 damage direct on the gunstock — calls he revealed lastly week.
Of specific grandness for DraftKings investors, owing to the company’s status as a money-losing entity and single with a lengthy timeline to profitability, Katz notes the sportsbook operator rearing extraneous great is “not a potential outcome.”
That’s decisive on multiple levels, non the to the lowest degree of which is that this is an inopportune time for DraftKings to knock cap markets. The company’s choices for nurture hard cash likely furuncle down pat(p) to selling incorporated debt or issuing more shares, neither of which is appealing. Investors are hoping Katz is rectify in assuming the gaming operator won’t imminently prove cash in because a bond certificate egress would almost certainly follow rated junk, so carrying a richly interest group rate. Likewise, investors’ tolerance for dilutive equity sales is wearing thin.
For DraftKings, Possible Golden State Catalyst
As Katz notes, California looms as a possible spark for DraftKings inventory — sentiment relevant to other online sportsbook operators.
However, things aren’t cut-and-dry for gaming companies in the largest state. In November, voters on that point will make up one's mind on II competing sports wagering propositions — unity supported past tribal gambling casino entities and the other dorsum past commercial message operators, including DraftKings.
As is often the pillowcase with tribal gaming entities, those in CA are balky at the possible action of unexampled competition threatening their turf. While the tribal proposition only when provides for in-person sports betting at casinos and a select grouping of racetracks, that ballot proposition is currently forward in the polls and those operators feature rich pockets with which to drop inward the state’s pricey media markets.
Some analysts are also envisioning a scenario inward which both ballot initiatives pass. That could exercise set upwardly a disputative and, to a greater extent importantly, lengthy sound conflict betwixt commercial gaming companies and tribal competitors inwards California.
Still, Jefferies’ Katz sees the body politic as a possible catalyst for DraftKings stock, noting California “could be among the to the highest degree productive thus far presumption the sizing and model.”
Focusing on Other New Markets
The psychoanalyst says DraftKings’ near-term outlook centers around profitability and be efficiencies inward markets inward which it’s established and unexampled market place entries.
The companion is almost a calendar week removed from debuting inward Ontario, Canada. In the US, manufacture observers and investors are hoping Old Line State and Buckeye State testament conjoin the regulated sports betting political party inward progress of the 2022 football season, but that might be asking too much.
Specific to DraftKings, the investment community of interests will follow monitoring the desegregation of the latterly completed Golden Nugget Online Gaming (GNOG) acquisition and if that sell pays turned inward terms of increased net gambling casino marketplace share.