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News Draft kings (NASDAQ:DKNG) The entry into the NFT trade may have boosted its shares at the end of last month. But this is not the main thing to focus on in the DKNG collection. The future of the company’s sports books is still a major driver.
For now, it seems to be one of the great sports betting platforms. But the race is on. Ground-based competitors will continue to increase their online offerings, which could hurt DraftKings’ future growth.
The company’s profitability may influence future prices. For now, it would be wise for emperors to act at a loss. The high cost of marketing and promotions is important to maintain a large market share – especially when many US states legalize mobile sports betting. But at some point, investors may be more patient and more willing to pay a high price for their shares.
To top it all off, growth stocks in general can be at risk for multiple contracts. Depending on how the interest rate is handled, the DKNG stock may be sufficient to keep it afloat. Don’t expect investors to pay higher in the near future.
DKNG stock and competition risk
On top of that, DraftKings’ share price-to-sell (P / S) ratio could be 24.08x. Average revenue growth around 9221 is projected for 2021. But in the long run, the competition for the future may be growing.
Flutter Entertainment’s (OTCMKTS:PDP) FanDuel The unit, which started as a daily sports operator, now accounts for 50% of the market share.
According to Motley Fall’s analyst, the emperor may be able to defend himself BetMGM, A joint venture between MGM Resorts (NYSE:M.G.G.) And Hold (OTCMKTS:GMVHY), Instead of being replaced as the second largest operator.
But don’t offerings from the ground casino giants start giving work to DraftKings? so far, Penn National (NASDAQ:Penn) Barstool Sportsbook Medrek is still a major threat.
However Caesar’s Entertainment (NASDAQ:CZR), Plans to invest heavily in its own sports book platform. The company can see the rapid growth of BetMGM in recent months.
Profitability and price concerns
For now, aboriginal kings may be concerned about the path to profitability. The American sports book industry is still in its early stages of development. Profiteering has taken the back seat now as emperors have focused on raising it. These risks can be exaggerated, as more mature systems are already profitable.
However, investors may start to lose patience. With losses expected in 2022 and 2023, the company may not be in the red until mid-2020. Also, the low margin nature of sports books, in the end, may be lower than expected. Combine these factors together, and it may be more difficult to maintain the current value for the DKNG stock, expanding less.
In addition to these concerns, something else may soon be weighed on the DKNG stockpile. His estimate can be compared by raising interest rates. The threat of inflation is already taking its toll. This was followed by inflation and interest rates in May.
If something else followed – or worse, if the Federal Reserve abandoned the concept of “transitional inflation” and switched from a dovish monetary policy – we could see a more serious correction. If this happens, do not expect the emperor to come out unscathed.
Expect the pros and cons to delete each other
Even my fear of competition, I believe, will keep the monarchs in a strong position. Long-term benefits may help maintain the current market share. The proliferation of mobile sports betting in the United States is still proving to be more than average in the coming years.
DraftKings’ latest revenue is good for the company as a whole: it posted better than expected losses in the last quarter and increased year-round estimates. But in general, do not expect the DKNG stock to take a big step any time soon, as it is still in a state of growth in terms of profitability and evaluation concerns.
At the time of publication, Thomas Neil had no place in the warranties mentioned in this article (directly or indirectly). The opinions expressed in this article are those of the author in accordance with the guidelines published by InvestorPlace.com.
Thomas Neil, a contributor to InvestorPlace.com, has been writing a stock analysis for web-based publications since 2016.
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