DKNG Stock Gets A Cheer From Wall Street – Retail Sees Headlines Shifting From ‘Prediction Market Doom To Prediction Market Boom’

Morningstar analyst Dan Wasiolek reiterated that DraftKings’ predictions business will add to its overall sales rather than cannibalize its traditional sports business.

• The company reported strong preliminary numbers for its predictions platform on Tuesday.
• Morningstar said the company’s predictions platform could generate $100 million annually starting this year.
• The firm believes DraftKings has a strong position in the U.S. digital gaming landscape, which can endure ongoing competition and regulatory pressures.

Shares of DraftKings (DKNG) caught investors' attention on Wednesday after strong performance numbers from its predictions platform for May prompted Wall Street analysts to become more optimistic about the firm.

At the time of writing, DKNG stock was up more than 5% and was among the top-ten-trending tickers on Stocktwits.

Morningstar’s Takeaway On DKNG

Morningstar analyst Dan Wasiolek reiterated that DraftKings’ predictions business will add to its overall sales rather than cannibalize its traditional sports business, which makes up for two-thirds of its total revenue.

The analyst believes DraftKings’ online platforms are well-positioned to partake in the $60 billion North American sports betting, i-gaming, and prediction-market revenue opportunity by 2030.

According to Morningstar, predictive markets will expand the company’s exposure in states with sports betting from 52% to 95% of the population and help it attract audiences aged 18 to 20, as well as people following new sports and non-sports events. The firm believes the company’s predictions platform could generate $100 million annually starting this year.

Durable DraftKings

The firm believes DraftKings has a strong position in the U.S. digital gaming landscape, and can endure ongoing competition and regulatory pressures. It expects the company’s durable U.S. revenue share to last amid ramping operating profits, leading to economic profits for at least the next 10 years.

Wasiolek noted that DraftKings' risk management and product innovation capabilities are the driving force behind robust results in its core sportsbook business. “We expect these advantages to drive a strong prediction market business and strengthen its competitive positioning.”

Wasiolek has rated DKNG five stars, the firm’s equivalent of a ‘Strong Buy’ and $45 price target, implying an upside potential of more than 63% as of the stock's last closing price.

Earlier today, Jefferies also said that it has become "incrementally more constructive" following a recent fireside chat with the company’s CEO Jason Robins. During the conversation, DraftKings said it noted the negative Street bias despite positioning and progress in predictions, while the core online sports betting and iGaming businesses remain "solid," TheFly reported.

What Do Retail Traders Think About DKNG?

On Stocktwits, retail sentiment surrounding the DKNG stock turned ‘extremely bullish’ from ‘bullish’ amid ‘extremely high’ message volumes over the last 24 hours.

One user on the platform said the headlines are shifting, from prediction market doom to prediction market boom.

View this Stocktwits post

Another user said the current rally “disproves the skeptics and highlights the company's strong, dominant position within its expanding market sectors.”

View this Stocktwits post

DKNG stock has fallen by more than 21% so far this year and 25% over the last 12 months, underperforming the S&P 500.

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