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Why DraftKings Is Falling Today

By Rich Duprey – Updated Aug 10, 2020 at 12:22PM

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The fall season for sports betting is looking bleak.

What happened

Shares of DraftKings (DKNG 9.42%) are falling 6% in morning trading Monday despite an analyst raising his second-quarter earnings forecast for the sports betting platform and reiterating a price target almost double its current valuation.

So what

Doubts about college football's fall season are growing as the Big Ten conference of the National Collegiate Athletic Association met yesterday to decide its fate amid concerns about the coronavirus pandemic. The Big Ten presidents reportedly voted to cancel the season.

A sports betting tote board

Image source: Getty Images.

Professional and college football are two of the most bet-on sports in the U.S., and DraftKing's fourth quarter, when these sports are played, typically accounts for the largest part of its revenue.

Now what

Major League Baseball is playing a shortened, 60-game season, and the National Football League is starting training camps. The National Basketball Association, another big draw for DraftKings, recently restarted a drastically altered season and has already postponed the start of the next season. And now college football seems doubtful.

The long-term outlook for the stock still seems positive, as IAC/Interactive just took a massive $1 billion stake in MGM Resorts, primarily because of its BetMGM sports betting and online gambling business. The rest of 2020, however, seems cloudy.

 

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$16.85 (9.42%) $1.45

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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