DraftKings Stock To $28?

DraftKings (DKNG) stock has fallen 8.1% during the past day, and is currently trading at $21.42. Our multi-factor assessment suggests that it may be time to buy more shares of DKNG stock. We have, overall, a positive view of the stock, and a price of $28 may not be out of reach. We believe there are only a couple of things to fear in DKNG stock given its overall strong operating performance and financial condition. Considering stock’s moderate valuation, we think it is attractive.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $11 Bil in market cap, DraftKings provides digital sports entertainment and gaming services, including sports betting, daily sports, and iGaming, alongside platform software development and distribution via websites, apps, and digital platforms.

[1] Valuation Looks Moderate

This table highlights how DKNG is valued vs broader market. For more details see: DKNG Valuation Ratios

[2] Growth Is Very Strong

• DraftKings has seen its top line grow at an average rate of 40.2% over the last 3 years
• Its revenues have grown 27% from $4.8 Bil to $6.1 Bil in the last 12 months
• Also, its quarterly revenues grew 42.8% to $2.0 Bil in the most recent quarter from $1.4 Bil a year ago.

This table highlights how DKNG is growing vs broader market. For more details see: DKNG Revenue Comparison

[3] Profitability Appears Very Weak

• DKNG last 12 month operating income was $-16 Mil representing operating margin of -0.3%
• With cash flow margin of 10.9%, it generated nearly $663 Mil in operating cash flow over this period
• For the same period, DKNG generated nearly $3.7 Mil in net income, suggesting net margin of about 0.06%

This table highlights how DKNG profitability vs broader market. For more details see: DKNG Operating Income Comparison

[4] Financial Stability Looks Very Strong

• DKNG Debt was $1.9 Bil at the end of the most recent quarter, while its current Market Cap is $11 Bil. This implies Debt-to-Equity Ratio of 17.8%
• DKNG Cash (including cash equivalents) makes up $1.1 Bil of $4.5 Bil in total Assets. This yields a Cash-to-Assets Ratio of 24.9%

[5] Downturn Resilience Is Weak

DKNG has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• DKNG stock fell 85.7% from a high of $71.98 on 19 March 2021 to $10.27 on 11 May 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $53.49 on 17 February 2025 , and currently trades at $21.42

 
2020 Covid Pandemic

• DKNG stock fell 44.5% from a high of $63.78 on 2 October 2020 to $35.40 on 30 October 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 5 February 2021

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read DKNG Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.