Please ensure Javascript is enabled for purposes of website accessibility

Is This a Buying Opportunity for DraftKings?

By Jose Najarro – Sep 22, 2021 at 11:15AM

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

DraftKings' stock price dropped over 5% in one day after online reports of an acquisition.

Today's video focuses on recent news affecting DraftKings (DKNG 1.24%) and its proposed offer to acquire Entain (ENT 0.07%), causing considerable volatility in stock prices for these two online betting companies. Online reports indicate that the acquisition offer is roughly $20 billion, almost the size of DraftKings' current market cap. Here are some highlights from the video: 

  1. Entain is a global market leader with numerous product offerings like sports betting and casinos and is focusing on new growth opportunities within its industry. If the acquisition goes through, it could accelerate DraftKings' international growth drastically. 
  2. MGM Resorts International (MGM 0.91%) currently has an exclusive partnership with Entain in the U.S online sports betting and online gambling market. Due to this partnership, MGM must agree with any transaction Entain has with a competing business, complicating things for DraftKings. 
  3. During an acquisition, the stock price of the company doing the acquiring tends to drop. There could be numerous reasons for this. First, for investors to be willing to sell their ownership, they would have to be getting more than what the company is currently worth. Second, the company making the purchases will either have to use cash, build debt, dilute shares, or all of the above. 

Click the video below for my full thoughts and analysis. 

*Stock prices used were the midday prices of Sept. 21, 2021. The video was published on Sept. 21, 2021.


Jose Najarro owns shares of DraftKings Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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.
$15.51 (1.24%) $0.19
Mgm Resorts International Stock Quote
Mgm Resorts International
$37.20 (0.91%) $0.34
Entain Stock Quote
$1,403.00 (0.07%) $1.00
Golden Nugget Online Gaming Stock Quote
Golden Nugget Online Gaming

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2022.

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.