DraftKings Stages Super Bowl Comeback, Build Toward Future
May 9, 2024; Columbus, OH, USA; Sports are shown on TVs behind the bar as guests enjoy the grand opening of DraftKings Sports & Social in the Short North. Though there are no on-site betting windows, eligible customers can place bets through the DraftKings app.
The DraftKings comeback has begun. With Super Bowl LX rapidly approaching, DraftKings is experiencing a surge in customer engagement and business volume. Will this increased growth lead to a higher share price?
Taking Inventory of DraftKings’ Stock
As of January 26, DraftKings (NASDAQ: DKNG) is trading at $30.57. That’s down nearly $20 since the 52-week high of $53.61.
What is the cause of the recent decline? When the public backs favorites, the sportsbooks lose. For example, favorites have won and covered in four of the last six NFL playoff games. While that bodes well for the public, the company loses revenue in the short term, which could lead to stock volatility.
Many investors see the decreased share price as a short-term flaw instead of as long-term business growth. DraftKings reported a loss of over $300 million in 2025 Q3 due to unfavorable betting results. However, the company reported $1.5 billion in revenue for Q2.
As they say, the house always wins. Investors must look into the future and not let the results of one game change their view of a stock like DKNG.
Even with the loss of revenue, betting is up, as the total amount wagered has increased in the past year by 10% to $11.4 billion.
As long as bet volume increases, revenue should follow once the percentage of favorites that win regresses to the mean.
DraftKings Implements Structural Hold
If the favorites keep winning, DraftKings must create higher margins. This idea is called Structural Hold, a concept where sportsbooks create bets that are more profitable for the house.
Creating a better edge for the house can be achieved through various means. Parlays are one of the most popular ways for sportsbooks like DraftKings to create an edge.
With a parlay, bettors wager that multiple legs of a bet will hit. For example, I could bet that the Seahawks win the game, Sam Darnold throws for over 300 yards, and he throws for fewer than two touchdowns. If one of those legs loses, the house wins and keeps the money.
Parlays are much harder to hit than straight bets. Compared to straight bets in recent reporting periods, NFL parlays on DraftKings have increased by 800 basis points. It’s an even higher increase—1,000 basis points— in NBA parlays.
The emphasis on parlays increases DraftKings’ Structural Hold.
Does DKNG have room for growth?
With a share price trading in the low thirties, is there room for growth?
Besides the public victories, tax hikes on gaming operators have driven down the share price. It’s not the be-all-end-all reason, but it certainly plays a factor.
Financial groups remain positive on DKNG’s growth. The average price target is $47.10. However, Morgan Stanley raised DKNG’s price target to $53, believing the company’s “strong cash flow trajectory” will outweigh the tax rates.
DraftKings also authorized a $2 billion share repurchase program. When the stock prices drop, the company can retire more shares for the same amount of cash. This helps boost the potential for future earnings per share.
Leveraging Super Bowl LX
The Super Bowl is the most bet-on sporting event in the United States. $1.39 billion was reportedly wagered on Super Bowl LIX.
DraftKings will embark on a full-court-press marketing push for the Super Bowl to drive engagement and growth.
Leveraging the customers to keep them betting after the Super Bowl will be one of DraftKings’ biggest priorities following football season.
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