Bullish Outlook for DraftKings: Sports Betting and Lottery Growth
Introduction
DraftKings has emerged as a leading player in the sports betting industry and is poised for continued growth. With increased interest in sports betting and the acquisition of Jackpocket, the company’s revenue potential is set to expand significantly.
Growth Drivers
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Sports Betting:
The sports betting industry is experiencing record revenues, and DraftKings holds a strong position as the number 2 sports betting platform in the US. Its growing market share indicates strong potential for future growth.*
Lottery:
The acquisition of Jackpocket provides DraftKings access to the $100 billion lottery industry. Jackpocket’s low customer acquisition costs will improve DraftKings’ profitability while cross-selling opportunities further boost revenue.Market Share
DraftKings has consistently gained market share in the sports betting industry. Its exclusive deals in certain states and strategic partnerships have contributed to its growth. As more states legalize sports betting, DraftKings is well-positioned to increase its market share further.
Revenue Forecast
Considering the industry’s anticipated growth and DraftKings’ increasing market share, the company’s revenue is forecasted to reach $15.7 billion by 2030.
Valuation
Based on a forecasted 2030 adjusted EBITDA of $5.5 billion and an EV/adjusted EBITDA multiple of 9.16, DraftKings’ implied enterprise value is estimated to be $50.3 billion. Assuming the issuance of 10.6 million shares for the Jackpocket acquisition, the price target for DraftKings is $103 per share, representing 153% upside from current levels.
Risks
Competition from new entrants, including ESPN Bet, and regulatory concerns surrounding Jackpocket’s lottery courier model pose potential risks to DraftKings.
Conclusion
Despite these risks, DraftKings’ leading position in the sports betting industry, expanding market share, and the anticipated benefits of the Jackpocket acquisition support a bullish outlook. The company is well-positioned to capitalize on the growth of sports betting and the lottery industry, driving future revenue and profitability.
