Sports betting operator DraftKings Inc DKNG looks strong compared to competitors for promotional activity, market share and more ahead of the 2024 NFL season.
The DraftKings Analyst: Needham analyst Bernie McTernan reiterated a Buy rating and $60 price target on DraftKings.
The Analyst Takeaways: The start of the NFL season is one of the most important times of year for sports betting companies, McTernan said in a new note.
The analyst looked at promotional activity, app rankings, market share and more metrics to see how DraftKings compares to market leader FanDuel, which is a unit of Flutter Entertainment FLUT and other sports betting operators.
"The promo environment is slightly more aggressive than last year, which is important given the key investor debate on the stocks is '25 estimates, specifically revenue growth and incremental margins," McTernan said of DraftKings.
DraftKings current new customer offer is $250 in free bets along with one month of NFL+ Premium. For comparison, FanDuel is also offering $250 in free bets along with a three-week free trial of NFL Sunday Ticket. The $250 is higher than $200 offered by both last year, the analyst noted.
Rival Fanatics is listed as the most generous to start the season with $1,000 in matching free bets over a 10-day period.
The FanDuel app beat out DraftKings in the last NFL season, with the ESPN Bet app from Penn Entertainment Inc. PENN topping the category after it launched in November.
Ahead of the 2024 NFL season, FanDuel ranks ahead of DraftKings with Fanatics and BetMGM ranking third and fourth.
ESPN, which is owned by Walt Disney Co DIS has the top sports media and fantasy sports apps heading into the season. The strong interest in ESPN could play out well for Penn Entertainment, which licenses the ESPN brand for its ESPN Bet sportsbook.
The analyst highlighted an update for ESPN Bet ahead of the season that sees more parlays, trending bets, exclusives, early payouts and further integration with ESPN apps and sportscasts.
"Overall, these product updates highlight PENN is executing on its plan for what they can control."
A look at market share comparisons from the analyst for the shows DraftKings and FanDuel with a clear lead and duopoly.
FanDuel led the way with 37.8% market share in 20234 compared to 34.8% for DraftKings. FanDuel also led in the first and second quarters with 38.7% and 37.3% compared to 34.4% and 37.0%, respectively.
DraftKings got closer to FanDuel in the second quarter and the third quarter could be a key time for the two operators with NFL and NCAA Football back in full action.
ESPN Bet had 3.2% market share in 2024 and market share of 4.6% and 3.1%, respectively, in the first two quarters of 2024. The Penn product continues to see minimal market share despite the large audience ESPN commands.
Ranking third was BetMGM, a joint venture from Entain and MGM Resorts International MGM. BetMGM had a market share of 8.6% in 2023 and posted a market share of 7.9% in both the first and second quarters. While BetMGM ranks third, the brand has also seen its market share fall from 12.1% in 2022 as DraftKings and FanDuel continue to gain share against the competition.
While there have been several competitors launching against DraftKings and FanDuel over the years, the two leaders have been able to fend them off and grow.
"Within this market, we believe DKNG has a sustainable customer acquisition strategy that should continue to drive its first- or second-place position in all states."
DKNG Price Action: DraftKings stock trades at $34.51 versus a 52-week trading range of $25.74 to $49.57. DraftKings stock is up 2.7% year-to-date in 2024.
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