Michal Parzhukhovsky | Unsplash
Gambling is a risk, and early buyers of the online platform’s stock lost their shirts.
October is the peak of the sports season. The baseball playoffs are underway. The NFL and college football seasons are in full swing, hockey is back, and soon NBA teams will be competing for championships.
Online gaming sites have stepped up the action as betting only enhances and enhances the experience. Sports betting has been around since athletes began competing, but legalized online gaming is still in its infancy.
As sites compete for gamblers, they offer many options, including individual bets, multiple game express, individual score bets, fantasy teams, in-game bets and more. Bettors have unlimited arena to participate.
But the bettors were the winners and the betting sites were the underdogs. Betting on companies like DraftKings (DKNG) and PENN Entertainment (PEN) was the losing bid in 2022.
Gambling is a risk, and early buyers of the online platform’s stock lost their shirts. Those holding DKNG and PENN could have done better by betting on sports events than the two companies after their March 2021 highs.
Sports betting is in full swing in October and continues until the peak of the betting season — the football playoffs and March Madness. The Super Bowl in early 2023 is one of the leading annual bets. Gamblers can even participate in a coin toss! March Madness in NCAA basketball lasts one month and features 67 different games that can be bet on throughout the month. The Kentucky Derby and Triple Crown races attract interest and significant gambling revenue.
The collapse of DKNG
When DraftKings burst onto the scene, its stock rose to $74.38 in March 2021. On October 21, the company’s shares were priced at $13.21, down 82.2%. Jim Chanos, a leading short seller, made a mint on his DKNG short position. Chanos argued that the company was overvalued because the business model is flawed and sports betting is an unattractive business with low margins and little opportunity for differentiation. In March 2022, when DKNG shares hit a low of $14.97, he said: “It’s getting worse, not better» for the company.
Shares of Penn Entertainment Shares ( PENN ) have also been ugly. They reached a new high of $142 in March 2021, but fell to $30.43 on October 21, which is 78.6% below the high. PENN shares continue to make highs and lows.
Online gaming companies have spent fortunes to attract customers, offsetting any profits. The money spent will benefit future buyers. Look for successful and well-capitalized gaming companies to grab DKNG, PENN and other Internet companies at bargain prices.
Stock price data is provided by IEX Cloud with a 15-minute delay. Chart price data is provided by TradingView with a 15-minute delay.
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