Tremendous Bowl Might Have Quick-Time period Affect On DraftKings Inventory

Posted on: February 10, 2023, 01:00h. 

Final up to date on: February 10, 2023, 02:47h.

Tremendous Bowl LVII kicks off in Glendale, Arizona, on Sunday. It’s anticipated to be essentially the most wagered-on version of the massive recreation in historical past. As such, some analysts are inspecting DraftKings’ (NASDAQ: DKNG) inventory forward of the championship conflict.

DraftKings stock
DraftKings signage at a baseball stadium. The Tremendous Bowl might have an effect on the corporate’s share worth. (Picture: Forbes)

That’s wise as a result of DraftKings is one among a small variety of pure-Play iGaming and sports activities wagering equities available on the market as we speak. In a Friday report back to shoppers, Macquarie analyst Chad Beynon notes that, relying on the sport’s consequence, DraftKings inventory and a few equivalents might get a lift.

Based mostly on latest business volumes, we estimate $1.0-1.5bn might be wagered on this yr’s Tremendous Bowl legally (~50%+ progress YoY) pushed by a mix of legalization (~20% progress) and from continued mainstream adoption (~30% progress) because of higher product choices (e.g., SGP, props) and higher consumer experiences (e.g., tech developments),” wrote the analyst.

Beynon notes that whereas the Tremendous Bowl received’t be considerably totally different from a regular-season NFL recreation, single-game volatility could be “materials” to sportsbook operators’ month-to-month and quarter gross gaming income (GGR) outcomes.

Potential Affect of Tremendous Bowl Volatility

As issues stand at this writing, the Philadelphia Eagles are -1.5 favorites over the Kansas Metropolis Chiefs, and the over/below is 51 factors. Some 70% of public bettors are on the Eagles, and 57% are on the over, in keeping with Macquarie information.

Translation: Assuming no vital modifications in betting patterns over the following two days, sportsbook operators are cheering for a low-scoring affair received by the Chiefs.

“We view low-scoring video games as incrementally useful to sportsbooks, given the proliferation of single-game parlays (SGPs), as public bettors favor SGP bets with high-scoring outcomes,” added Beynon.

In analyzing DraftKings inventory as a Tremendous Bowl Play, Macquarie runs bull, bear, and common situations for the operator. These embody DraftKings commanding wherever from 20% to 30% of Tremendous Bowl deal with with maintain estimates starting from -5% to twenty%.

To put the upside/draw back situations into context, and assuming a 25% deal with market share for DKNG, we estimate a constructive consequence (bull case) might add as much as 10% upside to present 1Q23 consensus whereas the bear state of affairs has 5% draw back,” in keeping with the analyst.

Whereas sports activities wagering equities have a historical past, albeit temporary, of rising after the Tremendous Bowl, some analysts are bearish on DraftKings, cautioning traders that the operator’s 2023 profitability narrative will face headwinds.

Tremendous Bowl Necessary, however Not Make or Break

Whereas there’s all the time hype ascribed to sports activities betting equities vis a vis the Tremendous Bowl, analysts and savvy traders largely view it as simply one other occasion on the calendar.

“That mentioned, most operators are extra involved with profiting from buyer acquisition and engagement alternatives main as much as the Tremendous Bowl,” concluded Beynon.

That’s to say, if DraftKings can purchase a slew of recent prospects on a cheap foundation due to the Tremendous Bowl, it might pay long-term dividends for the operator’s efforts to show worthwhile.



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