Jefferies believes DraftKings shares are on the verge of a comeback due to legalization of sports betting in California. David Katz, analyst for DraftKings, has resumed coverage with a buy rating. This was due to changing attitudes in North America towards sports betting. Katz stated that while we are aware of the increased marketing intensity, DKNG remains among the most well-positioned companies with strong brands, first-mover advantages, resources and strategic clarity. “To prove this point, despite the competition, DKNG has generally held on to > 20% handle market share in key markets, and consistently scored well in our survey and brand matrix.” Some analysts are worried about DKNG’s ability sustain a cash flow burn, before it turns to profit. Katz stated that these fears were “overblown”, and that DraftKings will have sufficient cash to launch a California-based company. He stated that the company had $1.773B in cash at the end 1Q22 and expects to have more than $800-$850M cash by 2023. DraftKings stock has fallen by 54%, but could shoot up to 162% depending on Jefferies $33 price target. — CNBC’s Michael Bloom contributed reporting
