The shares of digital sports betting platform DraftKings (NASDAQ: DKNG) have been popping over the last twelve months amid improving fundamentals and strengthening financial numbers.
The online gambling market share will increase substantially in the years ahead as key states are likely to legalize online betting, Goldman Sachs says. The firm is optimistic about DraftKings’ potential to take advantage of improving trends and expects that the presence of national contracts will help it to achieve scale sooner than its competitors.
Meanwhile, the online betting market size is predicted to reach $15 billion in 2025E and double in the next five years based on market reports. Along with rosy sports betting outlook, higher price targets have also been adding to investor’s sentiments. Bernstein has provided a price target of $71 while Goldman Sachs also sets Buy ratings.
The 12 new states are likely to legalize sports betting in 2021 amid to fill gap in pandemic related budget deficits, according to Morgan Stanley analyst Thomas Allen.
“Recent sports betting and iGaming trends have impressed, leading us to raise our 2025 combined TAM [total addressable market] 27% to $15b,” forecasts Allen.
Strong numbers are backing DraftKings stock upside
DraftKings stock price rally of almost 200% in the last nine months is strongly backed by financial numbers instead of expectations. The company has generated 98% year-over-year revenue growth in the third-quarter revenue, thanks to a 60% increase in active users.
“Our product offerings and scalable platform provide a distinctive and personalized experience for customers across the ten states where we operate mobile sports betting today, and we look forward to entering additional jurisdictions at the earliest opportunity,” says CEO Jason Robins.
The company expects FY2020 pro forma revenue in the range of $500 million-$554 million compared to the consensus of $525.5 million while FY2021 revenue guidance jumped to $750-$850 million versus consensus of $770.5 million.