They’re direct opponents, however on the subject of FanDuel mum or dad Flutter Leisure (NYSE: FLUT) and DraftKings (NASDAQ: DKNG), what’s good for one can profit the opposite.
A DraftKings billboard seems at Occasions Sq. in New York Metropolis. Analysts consider excellent news from rival FanDuel is benefiting DraftKings, too.(Picture: NASDAQ)
That was the case Wednesday when Flutter advised traders it sees the full addressable marketplace for gross gaming income (GGR) in North America swelling to $70 billion by 2027. The forecast consists of $63 billion attributable to the US, which is 1.5x greater than the operator’s prior estimates and doesn’t embody the addition of latest states into the iGaming or sports activities betting folds. That’s bullish for FanDuel, however the outlook additionally sparked a rally in shares of DraftKings.
In a notice to purchasers at present, JPMorgan analyst Joseph Greff mentioned that when making use of Flutter’s FanDuel projections to DraftKings, the implication is that DraftKings might generate as a lot as $8.2 billion in income and $1.9 billion in money move in 2027.
“(FanDuel’s) upbeat scale commentary is optimistic for DKNG and suggests the sector can be a two-horse race,” noticed the analyst. “We prefer it (the inventory) right here and see it as considerably contrarian and a recent cash concept.”
FanDuel Outlook Provides to DraftKings Rally
Flutter’s constructive commentary on the North American market is pertinent to DraftKings for an additional purpose. Within the US, that firm and FanDuel maintain a duopoly during which they management greater than 70% of the market. That standing has been reaffirmed via the primary three weeks of the 2024 NFL season when DraftKings and FanDuel mixed to garner 55% of all downloads of cellular sports activities betting purposes, based on Eilers & Krejcik Gaming (EKG).
DraftKings’ pop on the again of the Flutter announcement added to a surge that’s seen the inventory rally practically 15% off its August lows. Analysts consider DraftKings can profit from lots of the similar catalysts which can be boosting FanDuel.
We consider DKNG ought to see comparable upside as the corporate continues to enhance its parlay providing and parlay betting turns into extra mainstream over time,” wrote Truist analyst Barry Jonas in a report.
He added that Flutter’s robust ex-US publicity might compel DraftKings to look outdoors this nation for offers sooner or later and that if there’s an space during which FanDuel clearly bests its rival, it’s risk-management the place FanDuel’s power in pricing accuracy “helps to restrict the variability of short-term outcomes.”
DraftKings Insiders Nonetheless Promoting
Whereas DraftKings inventory has rallied over the previous month, some insiders have offered into that power. A Type 144 submitting with the Securities and Alternate Fee (SEC) indicated that on Sept. 25, co-founder Paul Liberman offered 643,654 shares, grossing proceeds of $26.39 million. That continues a pattern of rampant insider promoting on the gaming firm.
Liberman’s sale of DraftKings inventory got here after a few of his restricted shares within the agency vested. He additionally offered shares in August.
Some retail traders have decried the extent of insider promoting at DraftKings, claiming these transactions are stifling additional upside for extraordinary shareholders.
