DraftKings looks to ride hot streak with North Carolina launch just ahead of March Madness

DraftKings (NASDAQ:DKNG) is set up for a big March with the company's online sportsbook in North Carolina launching on March 11. Earlier in the year, DraftKings (DKNG) and NASCAR agreed to terms on a written designation agreement, paving the way for the digital sports entertainment and gaming company to operate in the state. After the launch in North Carolina, DraftKings Sportsbook will be available in 27 U.S. states, in addition to Ontario, Canada. DraftKings (DKNG) is holding a launch event in collaboration with NASCAR, with remarks from Carolina Panthers legend Greg Olsen, DraftKings (DKNG) Chief Commercial Officer Jeremy Elbaum, and North Carolina State Rep. Zack Hawkins. The timing of the North Carolina launch is advantageous, with the men's and women's NCAA tournaments beginning in less than two weeks and the NASCAR season in full swing. North Carolina is the 9th largest state in the U.S. by population and is forecast to have a top six total addressable market of potential sports betting customers.

The week ahead will also see a new feature on Comcast (CMCSA) Xfinity X1 TVs that will see live odds provided by DraftKings (DKNG) placed directly on Xfinity X1 TV’s. Xfinity customers will be able to view live odds from DraftKings (DKNG) directly on the TV while watching sports games and events, where they can find betting information while placing wagers on the DraftKings Sportsbook app. Bets can be placed through the scanning of a QR code that can add the wager to a DraftKings betslip on the customer's mobile, where the transaction can be completed.

Shares of DraftKings (DKNG) took a bit of stumble after the Boston-based company's Q4 earnings report, but Wall Street analysts are still positive on the profitability outlook for 2024-2025.

Morgan Stanley analyst Stephen Grambling noted that while Q4 results missed consensus expectations, guidance commentary from DraftKings (DKNG) combined with continued improvements in structural hold and its acquisition of Jackpocket revealed several factors that will continue to propel upside to DKNG consensus estimates. Grambling and team believe the main conversation points for DKNG now will pivot from the ability to generate positive cash flow to capital allocation.

Meanwhile, CBRE Equity Research analyst John DeCree sees upside for DraftKings (DKNG) from the acquisition of Jackpocket. The online lottery specialist was noted to have has a large database of high-intent/high-frequency users that could serve as a unique customer acquisition channel with significant cross-sell opportunity to the core DKNG iGaming and OSB products. The bolt-on acquisition is seen helping lower overall customer acquisition costs for DKNG and improve the potential long-term value of customers, while also widening the company's funnel.

On Seeking Alpha, Investing Group Leader Howard Jay Klein thinks the sports betting market will continue to be dominated to main players DraftKings (DKNG) and FanDuel (FLUT).

"DKNG’s market share is estimated to average in a range between 35% and 39% depending on state or a snapshot of action by month. FanDuel sits at ~$42%, again varying by state or a given action on a big event. Together, they currently own—and I mean own--~74% of the total market now, and, I believe, will continue to own through the next six years."

Of interest, detailed analysis by the New York Post declared the DraftKings Sportbook app the winner of a matchup with FanDuel (FLUT) app in terms of customer appeal.

Shares of DraftKings (DKNG) are up 18.4% on year-to-date basis and trade comfortably above their 100-day and 200-day moving averages. Short interest on DKNG stands at just 4.4% of the total float. The Seeking Alpha Quant Rating score on DKNG ranks in the top 25% of all the stocks in the broad casino, gaming and online sports betting sector.