Is DraftKings a good stock to buy after Disney deal reports?

on Oct 7, 2022
  • DraftKings rose 5% on Friday after reports of Disney’s ESPN partnership.
  • DKNG ranks as a growth stock and has suffered from the recession risks.
  • The stock trades in a short-term descending channel.

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DraftKings Inc. (NASDAQ:DKNG) extended gains by more than 5% on Friday after positive reports. Different news sources indicated that the sports-betting firm was close to a huge deal with Walt Disney’s ESPN. The size and structure of the deal were not disclosed. However, sources did indicate that ESPN will capitalise on DraftKings’s network in sports betting.

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The partnership reports are significant for DraftKings. The stock has fallen 40% year-to-date owing to the macro issues. That comes as investors shun loss-making growth names in preference for value-preserving alternatives.

A brief check on the company’s second quarter shows that it reported a loss of $217 million or £195.5 million. The loss improved from $305.5 million or £275 million in the prior year’s quarter. The loss was better than feared, but that did not deter sellers looking for value stocks in a recession.

Analysts’ ratings have been mixed for DraftKings. On October 6, Exane BNP Paribas issued an underperforming rating on the stock, with a price target of $12. The rating forced a 4% decline in the stock, which currently trades at $16. TipRank rates the stock a moderate buy with a $24.27 price target.

DraftKings trades on a descending channel

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Source – TradingView

Turning to the technical side, DraftKings trades on a descending channel. An RSI reading of 51 indicates almost a midpoint and equal bullish and bearish positions.

How attractive is DraftKings

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This article dismisses a bull call for DraftKings based on the descending channel. However, the RSI reading and the latest recoveries from the $10 bottom could attract buyers. Should the stock fail to break up from the channel, we should watch for price action lower at $14.


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