Football fans can finally rejoice as the long-awaited NFL season is set to begin. The inaugural game is scheduled for Thursday at 8:20 p.m. Eastern, featuring an exciting match-up between the Kansas City Chiefs and the Detroit Lions.
However, it’s not just sports enthusiasts who are eagerly anticipating the return of professional football. Investors in sports betting apps and entertainment companies are also gearing up for a promising year ahead. With fans gearing up to spend big on watching games and placing bets on their favorite teams and players, there are several stocks that could see significant gains throughout the NFL season.
DraftKings – Tapping into the Sports Betting Craze
One such company is DraftKings (ticker: DKNG), an online sports betting app. Its stock has already skyrocketed by 166% this year, riding on the growing popularity of sports betting in states where it is legal. In August, the company raised its full-year revenue and earnings outlook after reporting impressive second-quarter financial results. The data showed a substantial increase in both monthly unique payers and average revenue per monthly users compared to the previous year.
According to TD Cowen analyst Stephen Glagola, DraftKings holds a distinct advantage over its competitors. He notes that the company excels in customer acquisition through its differentiated daily fantasy sports program and its ability to adapt quickly to legalized sports betting across various U.S. states. Glagola rates the stock as Outperform with a $37 price target, highlighting its potential for further growth.
Furthermore, despite the restrictions on online sports gambling in certain states, there is a possibility of broader legalization in the future. Multiple locations, such as Kentucky, North Carolina, Puerto Rico, and Vermont, have recently legalized mobile sports betting. This expansion could provide additional opportunities for DraftKings to thrive.
Historically, DraftKings stock has experienced significant movements during the fall season. In fact, shares rose by 25% in the week following the kickoff of the 2020 NFL season, according to Dow Jones Market Data. While there was a minor dip of 5.8% after the start of the 2021 season, the stock rebounded with a 13% jump after the commencement of the 2022 season.
Walt Disney – Aiming for a Touchdown in the Football Arena
Although Disney (DIS) owns the sports cable network ESPN, Chief Executive Bob Iger has expressed openness to finding a strategic partner to acquire a portion of the network. Nevertheless, this has not deterred the entertainment powerhouse from making significant investments in football.
Stay tuned for more updates and analysis as the NFL season unfolds.
ESPN and the Expansion of Sports Betting
In its ongoing efforts to expand into the realm of sports betting, media conglomerate Disney recently struck a deal with gambling company Penn Entertainment (PENN). This partnership granted Penn exclusive rights to ESPN’s branded sportsbook, ESPN Bet. While this move brought Disney further into the sports arena, it was met with controversy among investors. Some analysts on Wall Street believed that Penn was not Disney’s first choice as a partner, pointing to competitors like DraftKings and FanDuel who have a larger market share in the sports betting space.
ESPN has also been actively expanding its football entertainment offerings. Recently, the popular YouTube commentary program hosted by former punter Pat McAfee, “The Pat McAfee Show,” made its debut on the sports network. According to reports from The Wall Street Journal, the five-year deal to bring the show to ESPN is valued at over $85 million.
One notable player in the sports betting market is European company Flutter Entertainment (PDYPY). Flutter Entertainment owns several brands, including FanDuel, which is a leading sports betting app in the United States. FanDuel saw significant growth in the first half of this year, attracting over 2 million new players and commanding a 47% share of the online sportsbook market.
The U.S. segment of Flutter Entertainment, driven primarily by FanDuel, contributed $3.1 billion to the company’s total revenue in 2022. This segment experienced a boost during this year’s Super Bowl, acquiring 1.2 million new customers in the first two months of 2023. As a result, Flutter’s shares have surged by 27% so far this year.
The rising popularity of parlay bets and fantasy football teams could further contribute to Flutter’s success in the market. These betting options, which enable individuals to wager on multiple outcomes simultaneously, appeal to a broad range of customers.