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Could DraftKings Stock Still Have More Room to the Upside?

By Matthew Frankel, CFP® and Jose Najarro – Sep 22, 2021 at 7:43AM

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The sports gambling company is already up big in just a couple years since going public.

DraftKings (DKNG 0.80%) is one of the most successful SPAC deals of all time, with shares up by more than 450% from the $10 SPAC IPO price. However, in this Fool Live video clip, recorded on Sept. 15, contributor Jose Najarro explains why there could be plenty of upside ahead. 

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Jose Najarro: So today, if you guys are into sports, you've probably seen so many advertisements right now for this company, especially as the NFL season is starting, and that is DraftKings. This one went through public, through the SPAC way about a year ago. I want to say this is probably one of the few SPACs that has kind of kept those gains. We've seen a lot of SPAC companies in the past few months jump up in stock price and then pulled down. But let's start off with me sharing my screen and just share my thoughts of DraftKings. I'm super-excited about the company. DraftKings. You guys might know it from their daily fantasy sports and their sportsbooks. They make money from some form of fees whenever you bet something through the platform. Another method that they're recently growing through is the iGamification world. This is like the online casino. Their iGamification application went live in 2020. Just most recently, they did an acquisition with Golden Nugget. Golden Nugget was another iGamification company. This was a great move in my opinion for DraftKings because they're able to grab the amount of users that Golden Nugget has. DraftKings, I believe, mentioned that the users that play iGamification or online casino games are more likely to do sports betting as well. So the translation, the acquisition made perfect sense in my mind. The other thing that I think gets overlooked is DraftKings is also entering the NFT [non-fungible token] marketplace. They've created this DraftKing marketplace where our user can go and purchase DraftKings' original NFT. Right now there's this whole crazy craze on NFTs. But the big problem, in my opinion, with NFTs is there is so much unknown on who's behind the project. But here with DraftKings, this is more, I want say, an authentic. They're working with big players. For example, right now, I think Tony Hawk is the one they are going to drop soon. I forgot who was the first. Tom Brady was one of the first NFTs that they dropped. There's some form of holdings behind it. It's a way for them to attract more users. Let's say you're not into iGamification, let's say you're not into casino or sports betting, but you are into the NFT world. You still have to make an account for DraftKings and then once DraftKings has your account information, they'll be able to cross-sell you with, "Hey, you came in with the NFT market, now let me show you about the casino world." DraftKings right now, I do want to say great management behind it and developing, where the growth of this company ramping right now, even if we're taking a look at adjusted earnings, this company is still processing as a loss. But there's still much growth for this company as there's still many states that haven't legalized this. The real question is how much of that growth has already been seen in the stock price.

Matthew Frankel, CFP 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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