DraftKings (NASDAQ:DKNG) Trading Down 8.4% - Time to Sell?

Key Points

• DraftKings shares fell 8.4% to about $21.63 in heavy trading, below both its 50-day and 200-day moving averages near $25.
• Despite the sell-off, analysts maintain a “Moderate Buy” consensus with an average price target of $34.37; 30 analysts rate the stock Buy or Strong Buy, compared with two Sell ratings.
• The company’s latest quarter showed 16.8% year-over-year revenue growth to $1.65 billion, but earnings per share missed estimates. Insiders sold nearly 97,600 shares over the past 90 days, while several institutional investors increased their holdings.

DraftKings Inc. (NASDAQ:DKNG - Get Free Report)'s stock price was down 8.4% during mid-day trading on Wednesday . The stock traded as low as $21.60 and last traded at $21.6250. Approximately 19,738,258 shares were traded during trading, an increase of 45% from the average session volume of 13,656,617 shares. The stock had previously closed at $23.61.

Wall Street Analysts Forecast Growth

A number of research analysts have recently commented on the stock. Wells Fargo & Company cut their price objective on shares of DraftKings from $32.00 to $29.00 and set an "overweight" rating for the company in a research report on Monday, July 20th. Freedom Capital upgraded DraftKings to a "strong-buy" rating in a research note on Wednesday, May 20th. HSBC upgraded DraftKings from a "hold" rating to a "hold" rating in a research note on Friday, April 24th. Northland Securities set a $27.00 price objective on DraftKings in a research report on Monday, May 11th. Finally, New Street Research set a $29.00 price objective on DraftKings in a research report on Monday, June 1st. One equities research analyst has rated the stock with a Strong Buy rating, twenty-nine have issued a Buy rating, eight have issued a Hold rating and two have issued a Sell rating to the company. Based on data from MarketBeat, the stock has a consensus rating of "Moderate Buy" and an average price target of $34.37.

DraftKings Stock Down 8.3%

The business's 50 day moving average price is $25.49 and its 200-day moving average price is $25.14. The company has a debt-to-equity ratio of 3.03, a current ratio of 1.02 and a quick ratio of 1.02. The company has a market cap of $10.74 billion, a P/E ratio of 360.73 and a beta of 1.66.

DraftKings (NASDAQ:DKNG - Get Free Report) last announced its earnings results on Friday, May 8th. The company reported $0.20 earnings per share for the quarter, missing analysts' consensus estimates of $0.22 by ($0.02). DraftKings had a net margin of 0.93% and a return on equity of 13.51%. The business had revenue of $1.65 billion during the quarter, compared to analyst estimates of $1.63 billion. During the same quarter last year, the business posted ($0.07) earnings per share. The business's quarterly revenue was up 16.8% compared to the same quarter last year. On average, analysts anticipate that DraftKings Inc. will post 0.54 earnings per share for the current fiscal year.

Insiders Place Their Bets

In other news, insider R Stanton Dodge sold 62,500 shares of the firm's stock in a transaction dated Thursday, June 11th. The stock was sold at an average price of $29.68, for a total transaction of $1,855,000.00. Following the sale, the insider owned 556,258 shares of the company's stock, valued at $16,509,737.44. This trade represents a 10.10% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Woodrow Levin sold 34,234 shares of DraftKings stock in a transaction dated Monday, May 18th. The shares were sold at an average price of $25.71, for a total value of $880,156.14. Following the transaction, the director owned 29,820 shares in the company, valued at $766,672.20. This trade represents a 53.45% decrease in their position. The disclosure for this sale is available in the SEC filing. In the last 90 days, insiders sold 97,596 shares of company stock valued at $2,756,991. 47.18% of the stock is owned by corporate insiders.

Institutional Inflows and Outflows

Several large investors have recently added to or reduced their stakes in DKNG. Viking Global Investors LP bought a new stake in shares of DraftKings in the 3rd quarter valued at about $561,125,000. Capital World Investors grew its holdings in DraftKings by 181.4% during the fourth quarter. Capital World Investors now owns 18,626,429 shares of the company's stock worth $641,867,000 after purchasing an additional 12,008,357 shares during the period. Janus Henderson Group PLC increased its position in DraftKings by 50.8% during the fourth quarter. Janus Henderson Group PLC now owns 25,313,909 shares of the company's stock worth $858,893,000 after buying an additional 8,524,923 shares during the last quarter. Norges Bank acquired a new position in DraftKings during the fourth quarter worth approximately $284,466,000. Finally, Spruce House Investment Management LLC raised its stake in DraftKings by 129.6% in the first quarter. Spruce House Investment Management LLC now owns 9,650,000 shares of the company's stock valued at $208,633,000 after buying an additional 5,446,166 shares during the period. Institutional investors and hedge funds own 37.70% of the company's stock.

About DraftKings

DraftKings Inc is a leading digital sports entertainment and gaming company specializing in daily fantasy sports, sports betting and iGaming products. The company provides an integrated platform where users can participate in daily fantasy contests, place wagers on professional sports events, and enjoy a range of online casino-style games. DraftKings' proprietary technology supports real-time odds, live scoring and advanced analytics to enhance the user experience across mobile and desktop applications.

Founded in 2012 by co-founders Jason Robins, Matthew Kalish and Paul Liberman, DraftKings began as a daily fantasy sports provider and rapidly expanded into regulated sports betting following legislative changes in the United States.

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