BY MARK SEBASTIAN
November 22, 2023
Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.
Have a stock YOU want us to review? Email my team here. – Mark
The Gambling industry is spending HUGE dollars advertising…
You watch an NFL game, ESPN, listen to sports talk radio…they are everywhere…
You would think that this business was the easiest money in the world…
I mean…being a bookie does pay…but yet many of these firms are NOT making money.
They spend so much on client acquisition…they lose money.
This company is one of those companies…the OG of online gambling DraftKings.
Started as a week by week fantasy betting company DraftKings, now merged with FanDuel, is still that, but they do the majority of their business on straight gambling…
Parlays, over/unders, spreads, money lines, this is where DraftKings lives now…
A business that has made companies like MGM and Harrahs money for years…but now…its online.
This company has moved up so hard…
Compare it to some of the other companies in the business:
DKNG has gone straight up, the rest of the business has floundered…is there anything in the numbers?
Short Answer…no
The market cap on DKNG is 18 billion dollars
The earnings…not there yet…the firm lost a cool billion dollars in the last year…mostly from customer acquisition.
The margin is clearly the issue, getting customers is the problem…this company has revenue of over 7 dollars a share and yet still lost a BILLION DOLLARS in the last year…
On a good note, the company only has 1.25 billion dollars in debt…and with the rally in the stock the debt to equity ratio is pretty darn good…
The bad news…
Yes the debt to equity ratio is getting better…but the debt is actually going up
What this comes down to is whether the company can make enough money to break through…
There will be winners in the business…it will 100% be a firm like MGM….but there is room for a pure online play..
Is that going to be Draftkings or will PENN gaming with their deal with ESPN pour cold water on DKNG.
With the move the stock has made, I would not be a buyer personally, I would use it as a short against the rest of the industry…rift and snap.
This is the approach we take in Nitro Trader where I might be jumping into this one…
rail
If you want to trade this rift and snap, you should join me in Nitro Trader because we are looking for RIFTS in industries and buying the losers and selling the winners…
We have seen this approach work in
semiconductors…Financials…Retail…indexes…railroads…
You name the industry…it tends to work…Join me with this special black friday offer..
Questions about that? Leave a comment below!
Your Only Option
Mark Sebastian
PS…seriously check out the nitro trader offer we have…
Mark Sebastian
Founder & CEO, Option Pit
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