Now that the NFL season returns, DraftKings (NASDAQ:DKNG) has seasonal upside ahead. This will accelerate and drive the company’s business momentum forward. In the second quarter, the company posted revenue of $298 million, triple from a year before.
DraftKings is an industry leader in the online gambling space. Competitors cannot match its technology platform. This gives DKNG stock a solid moat. Short-sellers, who have a short float of 8.7%, are betting that the market will correct its over-valuation.
This is a dangerous bet.
The company is expanding into more states. Combined with the busy football season and the start of other sports, users will wage their bets on the DraftKings platform. Patient investors willing to hold through the volatility may pick DKNG stock for the long term. As its moat widens, revenue growth will accelerate in the next few years.
Companies like fuboTV (NYSE:FUBO) are also trying to build a presence in the online sports betting market. But DraftKings has strong, recognizable branding.
Risks
Given its large market capitalization, the company may seek acquisitions. This would weigh on the stock and add acquisition risks for investors. High leverage is not ideal when interest rates may rise in the next few quarters. Still, pressure for industry consolidation will remove the weak players from the market. DraftKings will emerge the strongest.
