DraftKings (DKNG) Rises Amid Market Volatility: Strategic Insights for Investors

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• IBD 50 sports betting stock DraftKings (DKNG) is recovering from a plunge and is in a cup base — but there’s a caveat.
• DraftKings stock has reclaimed a key level after the company reported earnings and raised its internal forecast.
• “Investors should beware that third-stage base breakouts may have a higher likelihood of failing than earlier stage bases.” – MarketSurge chart analysis.

DraftKings, a leading sports betting platform, navigates market volatility with strategic adjustments and an optimistic revenue outlook for 2024.

DraftKings Stock Climbs Back After Raised Guidance

The stock is in a third-stage cup base with a 49.57 buy point, according to MarketSurge chart analysis. Shares reached a 52-week high on March 27, before plummeting and closing the session lower 6.8% in heavy volume. The drop came following news that NCAA President Charlie Baker was pushing for a ban on a type of bets in college sports, just as March Madness was in full force.

The plunge began the new base. The stock fell below its 10-week moving average on news that two Cathie Wood exchange traded funds — ARK Innovation (ARKK) and ARK Next Generation Internet (ARKW) — sold a total of 285,524 DraftKings shares in mid-April. DraftKings stock reclaimed its 10-week line the week ended May 17.

Investors should beware that third-stage base breakouts may have a higher likelihood of failing than earlier stage bases, as the stock is getting tired and investors may have taken profits. In addition, volume has been trending lighter than average, indicating demand is waning.

DraftKings Raises Revenue Outlook

Management raised its full-year 2024 revenue forecast to $4.9 billion at the midpoint from $4.775 billion. The company expects improved customer acquisition and engagement for the remainder of 2024.

FactSet second-quarter estimates show adjusted earnings of 17 cents a share, then a loss of 13 cents a share in the third quarter. Quarterly sales growth is expected to slow to 26% in the second quarter followed by 31% in the following two periods.

Market Expansion and Competitive Edge

DraftKings has its sights set on Puerto Rico for a new market. Some form of sports betting is currently legal in 38 states and the District of Columbia. Its biggest rival is FanDuel for sports betting market share.

Besides DraftKings stock, two other IBD 50 names in stage two bases nearing buy points may have a better chance after breaking out. Wealth management stock Blue Owl (OWL) is in a flat base and climbing to a 19.87 buy point after retaking its 10-week line.

Also, IBD SwingTrader position CrowdStrike Holdings (CRWD) is in a cup base with a 365 buy point. The cybersecurity firm impressed investors with its generative artificial intelligence at the recent RSA global cybersecurity conference.

Conclusion

DraftKings demonstrates resilience and strategic foresight in a fluctuating market, making it a noteworthy watch for investors, despite potential risks associated with late-stage bases.

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