DraftKings stock nears key price ahead of earnings

DraftKings stock price has done well this year. DKNG has jumped in the last seven consecutive weeks to a high of $44, its highest point since December 9. It has jumped by over 335% from its lowest level in 2022, giving it a market cap of over $20 billion. So, is DraftKings a good buy ahead of its earnings?

Sports betting demand is rising

The DraftKings stock price has soared in the past few years, as its annual revenue jumped from over $323 million in 2019 to over $3.6 billion in 2023.

This growth happened as the number of Americans who bet on sports continued rising. Survey data shows that there are over 67.8 million gamers in the US, a number that is continuing to grow. DraftKings customers have jumped from about 800k in Q1’27 to over 9.3 million in the last quarter. 

The sports betting has become a highly competitive one in the US, with firms like DraftKings, FanDuel, BetMGM, and Caesars having the biggest market share. The benefit is that chances of new entrants succeeding and dethroning these firms is difficult. 

DraftKings stock price rose recently as it always does, because of the Super Bowl event that attracts millions of users. 

DraftKings earnings ahead

The next key catalyst for the DraftKings stock price will be the upcoming earnings, providing more color for its business. 

As a recap, the most recent financial results showed that DraftKings revenue rose to over $1.095 billion in the third quarter. It was a big increase from the $790 million it made in the same quarter a year earlier. 

Analysts anticipate that the company’s growth momentum continued in the fourth quarter, capping its best year on record. The average estimate is that its revenue rose to $1.4 billion in Q4, higher than the previous $1.23 billion. This revenue growth will translate to an annual figure of $4.8 billion. 

This revenue growth will accelerate this year, with the management guiding towards an annual revenue of between $6.2 billion and $6.6 billion this year. That will represent an annual growth rate of 31%, an impressive figure for a company that has been in the industry for years.

The annual earnings per share will be 22 cents, a big increase from a loss of 41 cents. Its EPS will then get to about $1.36 in 2025. 

DraftKings stock price analysis

The weekly chart shows that the DKNG share price has rebounded in the past few weeks. This rebound started after it bottomed at $28.85 in August last year. 

The stock is approaching the first support of the Murrey Math Lines tool. Also, it has formed a symmetrical triangle pattern whose two lines are nearing the confluence level. In most periods, a bullish or bearish breakdown happens when the two lines near their confluence level. 

The DKNG stock has remained above the 50-week Exponential Moving Average (EMA), a sign that bulls are in control. It has also moved to the 50% Fibonacci Retracement level, while the Relative Strength Index (RSI) and the MACD have all pointed upwards. 

Therefore, the stock will likely have a strong bullish breakout as bulls target the next key resistance level at $49.43, the highest swing on March 25. This target is about 15% above the current level. A break above that level will point to more gains, potentially to $60, up by about 40% from the current level.