How DraftKings Investors Who Bet On Q2 Earnings Are Faring Friday

While many of the issues in the growth sector prior have put some distance from their lows for the move, others have not. 

One issue in that arena is moving following a second-quarter beat: Draftkings Inc DKNG, which is the PreMarket Prep Stock Of The Day.

Crapping Out: At the height of meme mania in March 2021, DraftKings made its all-time high at $74.38 and weakened to end the month at $61.33. Following a two-month decline to $40, it rebounded to $64.58 in September and then went into a freefall.

It was lower in nine of the next 10 months ending in June, with the low for the move coming in May at $9.77. Interestingly, that level is where its remarkable rally began in April 2020, when it transformed from a SPAC to an existing company.

DraftKings Bottomed On The Same Day As ARK Innovation: Perhaps no issue has exemplified the run-up and collapse of the growth technology sector than Cathy Wood’s ARK Innovation ETF ARKK. It just so happened that on the same day (May 12) the issue bottomed at $35.10, DraftKings put in its low for the move at $9.77.

It rebounded to close that day at $11.37 and did not give investors a chance to buy the issue under $10 or even $11, as its low the following day was $11.63, In mid-June, it did have a brief dip and put in three lows in the $10 handle over a four-day period. 

The high for the rebound was made on Thursday at $16.95 and the high close for the recent rally was made on Wednesday at $16.82.

Related Link: DraftKings Q2 Earnings Highlights: Revenue Beat, Company Raises Guidance, Optimistic On More State Sports Betting Launches

The DraftKings Q2 Report: Before the opening Friday, the company reported an adjusted EPS beat with a loss of 29 cents per share vs. an estimated loss of 85 cents per share. Second-quarter revenue increased 57% year-over-year to $466 million, which beat the estimate of $435.14 million.

More good news came from the average monthly unique players figure, which increased 30% year-over-year to 1.5 million. The average revenue per user was $103 for the quarter, which was a 30% increase year-over-year.

Finally, the company raised its full-year revenue guidance from a range of $2.055 billion to $2.175 billion to a range of $2.08 billion to $2.18 billion versus the estimate of $2.1 billion.

PreMarket Prep's Take On DraftKings: When the issue was being covered on the show Friday, it was trading higher by nearly $1 at $17.25.

It had already established its spike high at $19.06 off the print. Co-host Dennis Dick was very cautious on the issue and was not going to be surprised if the issue surrendered its gains.

The author of this article was more optimistic and discussed a scenario that may lead to a continuation of the rally: the issue being able to establish a bid over $17 off the opening would clear the pairs of highs from Wednesday and Thursday.

On the upside, the premarket high of $19.08 seemed like an overshoot to the upside.

DKNG Price Action: After a much higher opening Friday ($17.80 vs, $16.36), the issue began to slide toward the aforementioned support area and buyers stepped in big time, with the stock only reaching $17.36.

The ensuing rally took the issue all the way to $19.53 before a retreat to the lower $18 handle. 

The discussion on the issue from Friday’s show can be found here:

Photo via Shutterstock.