DraftKings, a prominent operator in the gaming circuit, experienced a challenging August, like many of its industry counterparts. However, its shares saw a 5.29% uptick last week, which suggests a positive turnaround could be on the cards.
After its public launch in April 2020, DraftKings’ billboard garnered much attention at New York City’s Times Square. Following a trying August, industry research implies a possibility for the stock to rebound. Market pundits are viewing the recent stock pullback, which has led to a year-to-date rise of 160.23%, as a potential buy signal. The recent withdrawal in DraftKings stock has been modest due to the shares finding technical backing at a key price point, thereby confirming it’s not in an uncontrolled descent.
DraftKings saw a retreat to its 80-day moving average last week after spending considerable time above this threshold. In the past three years, five similar instances resulted in a 14.6% one-month gain for DraftKings, 80% of the time. If history holds, a similar move from the present standpoint could bring the stock near its August 4, year-to-date peak of $34.49. The shares were valued at $29.64 last Friday, suggesting that an uplift to August’s high could mean a promising 16.3% elevation.
Though DraftKings saw some profits last week, August was brutal for various risk assets, and the market traditionally faces a slump in September, known for being one of the worst performing months. These factors could pose a challenge for growing stocks with substantial year-to-date gains, like DraftKings.
On the positive side, the commencement of the college football and 2023 NFL seasons could bring a bounce for DraftKings and similar firms, given football’s status as America’s most betted sport. Historically, gaming stocks often see a surge with the NFL season’s onset.
In addition to this, DraftKings and its competitors are predicted to kickstart mobile sports wagering in Kentucky and Puerto Rico by the end of the year. This move could offer promising new avenues for generating revenue.
Despite DraftKings’ stock trailing the S&P 500 last month, some potential significant indications could foresee the shares’ immediate destiny coming from the options market. Short-term options traders are showing increased pessimism, which when unwound, could present a favorable setup for DraftKings stock. Furthermore, DraftKings options contracts are currently hovering at the lower range of historical volatility readings, suggesting that options market participants expect limited near-term instability from this typically unpredictable gaming stock.
