Like other gaming stocks, DraftKings (NASDAQ: DKNG) struggled inward August, but shares of the sportsbook manipulator gained 5.29% last week. That could follow a ratify of best things to come.
Some market place observers indicate the recent pullback by the high-flying gaming stock — it’s upward 160.23% year-to-date — is intelligent and could correspond a buying opportunity. The recent curtailment by DraftKings carry has been special because the shares found technical financial support at an important price range, indicating it’s not inward unloosen fall.
Specifically, DKNG in the last week pulled rear to its 80-day moving average out after disbursement a important stop of time to a higher place it,” noted Schaeffer’s Investment Research. “According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, cinque similar signals occurred during the yesteryear 3 years, with DraftKings stock up notching a 14.6% one-month earn 80% of the time. From its stream perch, a similar relocation would assign the equity backward nigh its Aug. 4, year-to-date high up of $34.49.”
The shares unsympathetic at $29.64 last-place Friday, indicating that a getting even to the Aug mellow implies upside of 16.3%.
Catalysts, Headwinds for DraftKings Stock
Despite some upside accrued shoemaker's last week, August wasn’t tolerant to peril assets and Sep is often unity of the whip months of the twelvemonth for stocks. That seasonality could live intriguing for growth stocks that are already sporting substantial year-to-date gains — a measure DraftKings fits to a tee.
On the other hand, seasonality could favor DrafKings and some peers because college football game started inward sincere lastly Saturday and the 2023 NFL season starts this Thursday. Football is the most wagered on sport inward the US and the comer of the NFL often sparks upside for sportsbook equities, albeit temporary.
“Online gaming stocks make a account of rallying into and on the start of NFL Season, though to a lesser extent so after,” according to a recent account by Bank of America.
Additionally, DraftKings and its rivals are expected to be live with roving sports wagering inward Kentucky this month and Puerto Rico past the remainder of the year, bringing new revenue-generating opportunities to the table.
Options Market Signals
While DraftKings stockpile lagged the S&P 500 last-place month, at that place are some potentially of import clues regarding the shares’ near-term fate emanating from the options market.
“Given this lacklustre technological setup, it’s no surprise short-term options traders are more pessimistic than usual,” added Schaeffer’s. “However, an unwinding of this pessimism could foreshadow swell for DraftKings stock; its Schaeffer’s put/call clear interestingness ratio (SOIR) of 1.06 stands higher than 88% of indication from the past times year.”
Additionally, DraftKings options contracts currently domiciliate at the take down ending of historical unpredictability readings, indicating options marketplace participants don’t anticipate a great deal near-term upheaval out of the often volatile gaming equity.
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