Is DraftKings (DKNG) A Bargain After Its Alberta Launch?

DraftKings expansion into Alberta

DraftKings (DKNG) is set to launch its online sportsbook and casino, plus the Golden Nugget Online Gaming brand, in Alberta on July 13, extending access across a 34th North American jurisdiction.

See our latest analysis for DraftKings.

The Alberta expansion comes after a mixed run for DraftKings, with a 90-day share price return of 17.61% but a year-to-date share price decline of 25.76% and a 1-year total shareholder return that has fallen 38.40%. This suggests that recent momentum has picked up from a weaker longer-term trend.

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After a sharp six month slide and a recent bounce around the Alberta news, the real tension around DraftKings now is simple: is most of the recovery already in the rearview mirror, or is meaningful upside still on the table as the valuation stands today?

Most Popular Narrative: 24% Undervalued

On the most followed narrative, DraftKings is priced at $26.48 against a fair value estimate of $34.71, which frames Alberta as one step in a bigger earnings story.

Ongoing product innovation in live betting, in game personalization, and AI driven trading is increasing user engagement and dynamic pricing opportunities, which should boost average revenue per user (ARPU) and improve long term earnings potential.

Read the complete narrative.

The core of this valuation hinges on how fast analysts think DraftKings can scale revenue, widen margins, and re rate the business on a richer earnings multiple. The narrative sets out a specific earnings path, a tighter share count profile, and a required future P/E that is still above the wider US hospitality sector. Want to see how those moving parts fit together to reach that $34.71 fair value and what kind of earnings power that implies by the late 2020s.

Result: Fair Value of $34.71 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the DraftKings story could look different if state tax hikes or tighter rules on prediction markets reduce profitability and slow the expansion that investors are counting on.

Find out about the key risks to this DraftKings narrative.

Next Steps

If the mixed sentiment around DraftKings has you torn, do not wait for consensus to form. Check the numbers and context for yourself, including the 3 key rewards and 3 important warning signs.

Looking for more investment ideas beyond DraftKings?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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