Please ensure Javascript is enabled for purposes of website accessibility

Why DraftKings Was Trouncing the Market on Tuesday

By Eric Volkman – Aug 24, 2021 at 3:53PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company enters the micro-betting arena with a new collaboration.

What happened

Online sports gambling specialist DraftKings (DKNG 6.09%) was a good bet for investors on Tuesday. In midafternoon trading, the company's stock was up by nearly 6% on the back of a deal it announced that morning.

So what

DraftKings' arrangement is with a privately held company called Simplebet, a specialty tech company that facilitates micro-betting -- i.e., wagers on individual plays within a sporting event.

Person stands in stadium while holding a fistftul of cash.

Image source: Getty Images.

Under the terms of the deal, Simplebet's products will be offered to DraftKings customers for Major League Baseball, National Football League, and National Basketball Association games, plus a myriad of college football contests. 

In its press release trumpeting the deal, DraftKings quoted its president of global product and technology, Paul Liberman, as saying, "We’re excited to be working with Simplebet to change the in-game betting experience for our customers and, together, changing the way sports fans engage with their favorite sports."

DraftKings did not provide any details as to the financial particulars of the arrangement.

Now what

Assuming the terms of the deal are more or less reasonable, it feels like an obvious win-win for both DraftKings and the up-and-coming Simplebet. It deepens the former company's offerings and makes them "stickier" to the die-hard sports gambler willing to bet on a particular at-bat or field goal attempt. 

That said, we should bear in mind that while DraftKings has come a long way as a company, it still has quite a few challenges to surmount. A major one is its consistent lack of profitability; no matter how many sweet deals it might sign, investors will expect bottom-line surpluses sooner rather than later.

Eric Volkman 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.

Invest Smarter with The Motley Fool

Join Nearly 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$15.32 (6.09%) $0.88

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
349%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.