Potential for DraftKings Stock to Rebound after August Decline

Posted on: September 4, 2023, 04:10h. 

Last updated on: September 4, 2023, 04:10h.

Following a challenging August, DraftKings (NASDAQ: DKNG) stock saw a 5.29% gain last week, indicating potential for improvement in the future. Like other gaming stocks, it struggled throughout the month but showed resilience and signs of technical support, suggesting a positive outlook.

DraftKings stock
A DraftKings billboard appears at Times Square in New York City after the company went public in April 2020. The stock could bounce back following a rough August, according to a research firm. (Image: NASDAQ)

During the past week, DraftKings stock saw a pullback to its 80-day moving average, a level it has historically rebounded from. Technical indicators suggest a potential 14.6% one-month gain, which would bring the stock close to its year-to-date high.

With last Friday’s closing price at $29.64 and the potential for a 16.3% upside, investors may find an opportunity to capitalize on DraftKings stock.

Catalysts, Headwinds for DraftKings Stock

While August was challenging for risk assets, September historically poses difficulties for stocks as well. However, the start of college football and the upcoming NFL season could benefit DraftKings and similar companies. Football is the most popular sport for betting in the US, leading to potential upside for sportsbook stocks.

“Online gaming stocks have a history of rallying into and on the start of NFL Season, though less so after,” according to a recent report by Bank of America.

Furthermore, DraftKings and its competitors are expected to launch mobile sports wagering in Kentucky this month and in Puerto Rico by year-end, creating new revenue opportunities.

Options Market Signals

While DraftKings stock underperformed the S&P 500 last month, insights from the options market may provide clues about its near-term performance.

Short-term options traders are currently more pessimistic, contributing to a higher put/call open interest ratio (SOIR) of 1.06. However, historical volatility readings for DraftKings options contracts are at the lower end, suggesting a lack of expected turbulence in the near future.

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