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Should You Scoop Up Shares of DraftKings on the Dip? By StockNews

by Mike Robinson

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© Reuters. Do You Need to Buy DraftKings Shares?

DraftKings is a favorable company (NASDAQ:) due to its recent entry into NFT space, and future expansions in the online betting market. 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. Is the stock likely to rebound from recent price drops? Continue reading to find out more.
DraftKings Inc. (DKNG), a digital sports betting company, offers sports betting and other iGaming services. 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.

DNG currently trades lower than its 200-day and 50-day moving averages, $54.15 and $55, which indicate a downward trend. While expanding its online Sportsbook could increase its customer base, and improve fan engagement further, the number of class-action lawsuits against it could encourage bearish investor sentiment.

Further, its proposed takeover of British gambling firm Entain, which already has a joint venture with MGM Resorts International (NYSE:), requires MGM’s consent. In the short-term, the uncertainty around the deal may cause the stock to experience more extreme price swings.

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