DraftKings (DKNG) Stock Price Analysis 2025: Potential Surge Amid New York Sports Betting Legislation

DraftKings Inc. (DKNG) experienced a significant stock price drop in October 2023, plunging over 50% within four weeks after reaching an all-time high in the mid-$60 range. Since then, the stock has rebounded strongly, recovering about two-thirds of its losses. Despite impressive 43% year-over-year revenue growth, the company continues to operate at a loss, prompting cautious valuation assessments from many analysts.

Key Highlights

• DraftKings stock surged to an all-time peak in October 2023 before a sharp correction exceeding 50%.
• January 2024 saw the stock stabilize in the upper half of its broad trading range.
• Pending sports betting legalization in New York could propel DraftKings to new record highs.

Looking ahead to 2024, optimism is rising as sports venues anticipate full spectator attendance, and televised sports regain strong viewership, moving beyond the era of artificial fan engagement. Legislative momentum is building in North America, with New York and Canada debating sports betting laws, and Texas reportedly preparing to address legalization soon. These developments could provide the catalyst DraftKings needs to reach new highs in the first quarter.

JPMorgan analyst Daniel Politzer initiated coverage of DraftKings with a "Neutral" rating and a $48 price target, highlighting the company's leadership in the rapidly expanding U.S. sports betting and iGaming markets, strong customer retention, and dominance in daily fantasy sports. Wall Street consensus remains cautiously optimistic, with 11 "Buy" and 5 "Hold" ratings, and price targets ranging from $39 to $100. Currently, the stock trades over $11 below the median target of $64, suggesting room for upward movement.

Understanding Quarterly Revenue Growth

Quarterly revenue growth compares a company's sales in a given quarter to sales in a previous quarter or the same quarter in a prior year, offering insights into business momentum and market demand.

DraftKings Stock Performance Chart (2019–2024)

DraftKings went public in December 2019 at $10.80, quickly climbing to $19.50 by early March 2020 before a sharp 46% drop amid market volatility. The stock stabilized near $10 before rallying back to previous highs by April. Momentum continued through mid-2020, reaching the mid-$40s by June. In September 2023, DraftKings hit a new all-time high of $64.19 before retreating sharply by month's end. Following a recovery phase, the stock has been trading in the low to mid-$50s range, awaiting fresh catalysts.

The on-balance volume (OBV) indicator suggests that recent price gains were primarily driven by short-covering rather than sustained buying interest. This implies that for DraftKings to break out decisively, strong fundamental drivers are necessary. The upcoming New York sports betting legislation debate could serve as a pivotal trigger, given the state's substantial revenue potential.

What is Short-Covering?

Short-covering occurs when investors buy back securities they previously sold short to close their positions, often leading to upward price pressure. This process is also known as "buy to cover."

Conclusion

DraftKings stock has made a solid recovery from its late 2023 sell-off, but the path to new highs likely depends on favorable sports betting legalization developments, especially in New York. Investors should monitor legislative progress closely as it could unlock significant value for the company in 2024.

Disclosure: The author held DraftKings shares in a family account at the time of writing.

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