If You Invested $1,000 In DraftKings Stock One Year Ago, Here's How Much You'd Have Now

Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 SPY total return over the last 12 months is 39%. But there is no question some big-name stocks performed better than others along the way.

DraftKing’s Bumpy Road: One company that has been an exciting investment in the last year has been U.S. sports betting and iGaming company Draftkings Inc DKNG.

Unlike many other companies, the COVID-19 pandemic didn’t hurt DraftKings’s business. In 2020, DraftKings reported a whopping 90% revenue growth. Unfortunately, the company’s net loss also jumped 763% to $1.23 billion.

Economic shutdowns around the world facilitated a broad shift from casino gambling to online gambling and sports betting. Morgan Stanley recently forecast that the U.S. gambling market will grow to $8 billion by 2025.

The combination of limited real-world entertainment options and multiple government stimulus payments created a perfect storm for online gambling. The states of Illinois, Michigan, Montana, Colorado and Tennessee all launched online sport betting throughout the year in 2020.

See also: How to Buy DraftKings, Inc. (DKNG) Stock

DraftKings completed a merger with special purpose acquisition company Diamond Eagle Acquisition Corp in April 2020. The stock closed its first day of trading on the Nasdaq up 10.1% to close at $19.35.

DraftKings shares climbed as high as $44.79 in early June before spending the next three months consolidating. The stock pulled back to $27.54 in July, but was back making new highs again in mid-September.

DraftKings shares topped out at $64.19 in early October but then dropped back down to $34.90 later that month. The October sell-off was driven in large part by the company selling 32 million shares of stock on October 7 at a price of $52, a significant discount to the stock’s closing price of $56.79 on the previous day.

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DraftKings In 2021, Beyond: DraftKings ultimately made it to a new all-time high of $74.38 in March 2021, but the stock has since pulled back to under $50. Investors may be partly concerned that the company will have a difficult time maintaining its exceptional growth numbers now that the economy is opening back up fully.

Traders may also continue taking profits in DraftKings after a big run since its SPAC merger. A potential rotation out of growth stocks and into value stocks could also weigh on DraftKings’s performance. The stock currently trades at 23.5 times sales and is not expected to be profitable in the near future, suggesting some extremely high growth expectations are already priced in.

Still, new markets will continue to open up opportunities for DraftKings in the years ahead. Virginia and North Carolina have already launched online sports betting so far in 2021, and states like Washington, Maryland and South Dakota are expected to do so in the near future.

DraftKings investors who bought one year ago and held on have generated a nice return on their investment. In fact, $1,000 in DraftKings stock bought on July 26, 2020, would be worth about $1,322 today.

Looking ahead, analysts are expecting more upside for DraftKings in the next 12 months. The average price target among the 24 analysts covering the stock is $72.50, suggesting 46.1% upside from current levels.