DraftKings poised for growth as it expands into prediction markets

DraftKings is positioned for growth with its expansion into prediction markets, a significant growth opportunity that allows speculation on binary outcomes. J.P. Morgan analyst Daniel Politzer maintains a Buy rating on DKNG stock, citing the company's advanced technology, extensive marketing capabilities, and strategic approach to balancing regulatory relationships. TD Cowen also maintains a Buy rating with a $53.00 price target.

DraftKings (DKNG) is poised for significant growth with its strategic move into the prediction market space. According to Jefferies, the company is likely to follow Flutter Entertainment’s (FLUT) lead in this area [1]. However, Jefferies also noted that DraftKings could take a different route if it acquires Railbird, a New York-based technology company operating a federally regulated prediction market and event contract exchange.

Jefferies maintains a 'Buy' rating on DraftKings with a $54 price target [1]. This positive outlook is supported by the company's advanced technology, extensive marketing capabilities, and strategic approach to balancing regulatory relationships. TD Cowen also maintains a 'Buy' rating with a $53.00 price target [1].

The partnership between Flutter Entertainment and CME Group is expected to launch later this year, offering products that include benchmarks such as the S&P 500 and Nasdaq-100, prices of oil and gas, gold, cryptocurrencies, and key economic indicators such as GDP and CPI [1]. This partnership avoids the need for Flutter to acquire a costly designated contract market and legal conflicts, as cited by Jefferies.

DraftKings stock has gained 24% this year and jumped over 30% in the last 12 months [1]. Retail sentiment on DraftKings remains bullish, with chatter at low levels, according to data from Stocktwits [1]. Shares of the company were up nearly 1% at $45.96 during midday trading on Thursday.

While the prediction market space holds potential, Jefferies has reservations about the space due to potential impacts on state regulator relations [1]. However, another bullish user on Stocktwits noted a chance of a prediction announcement by the end of August [1].

References:
[1] https://stocktwits.com/news-articles/markets/equity/draft-kings-could-enter-prediction-markets-says-jefferies/chsj5uLRdis