(C) Reuters. Should You Scoop Up Shares of DraftKings on the Dip?
Its recent entry into the NFT space and further expansion opportunities in the online sports betting market are favorable for DraftKings (NASDAQ:DKNG). However, investor uncertainty about a $22 billion acquisition deal with a British sports betting firm and current class-action lawsuits related to the merger are casting a pall over the company’s growth prospects. So, the question is, will the stock be able to recover from its recent price decline? Read ahead to learn more.
Sports betting operator DraftKings Inc. (DKNG) delivers digital sports entertainment, sports betting, and iGaming products . The company went public on April 24, 2020, through a reverse merger with blank-check company Diamond Eagle Acquisition Corp . Its recent launch of an NFT ecosystem–DraftKings Marketplace–to give sports fans access to digital collectibles from top athletes has driven its shares up 10.2% year-to-date. But DKNG’s stock price has declined 9.1% over the past month and 23% over the past six months. Closing yesterday’s trading session at $51.33, its stock is trading 31% below its 52-week high of $74.38.
Moreover, DNG is currently trading lower than its 50-day and 200-day moving averages of $54.15 and $55, respectively, which indicates a downtrend. Although the expansion of its online Sportsbook in new markets could help grow its customer base and further improve fan engagement, several class-action lawsuits filed against the company could foster bearish investor sentiment.
Further, its proposed takeover of British gambling firm Entain, which already has a joint venture with MGM Resorts International (NYSE:MGM), requires MGM’s consent. The uncertainty surrounding the deal could lead to the stock experiencing more dramatic price swings in the near term.
Should You Scoop Up Shares of DraftKings on the Dip?
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