North American Betting Market Believed to Best Yield Through DraftKings, According to Analyst's View
In the rapidly evolving world of online sports betting and iGaming, DraftKings (NASDAQ: DKNG) stands out as a significant player with a market capitalization of around $23 billion and an enterprise value nearing $22.96 billion[1]. The company's stock, trading under the ticker symbol DKNG, has shown a modest weekly decline, but it's still up a solid 16.18% year to date[1].
DraftKings' growth outlook is promising, with the company expanding beyond sports betting into iGaming and digital lottery. iGaming revenues have seen a 23% year-over-year increase, and there have been notable gains in cross-selling among its product lines[2]. Monthly unique paying users have grown, along with the average revenue per user, supporting revenue growth forecasts[2]. Management projects 2025 revenues to hit the high end of $6.2 to $6.4 billion, indicating robust top-line growth[3].
However, DraftKings' valuation metrics are significantly higher than many traditional S&P 500 companies, even those with similar growth rates. The stock has a forward P/E ratio of about 58, a Price/Sales ratio of approximately 4.0, and a Price/Free Cash Flow near 44[1][3]. These ratios are much higher than those of traditional gaming companies like Penn National Gaming (PENN) and MGM Resorts[3].
Compared to typical mid-growth S&P 500 companies, DraftKings' valuation multiples are elevated, partly due to investor expectations of continued rapid revenue expansion, but also because of the company's current negative profitability metrics[3].
Despite this, DraftKings is well-positioned for double-digit revenue growth. The company's FCF is expected to rise to 5%/7% in '26E/27E[1]. Potential tailwinds for investors include its compelling valuation, share buyback dedication, and the upcoming start of the football season.
However, it's worth noting that insider selling has been reported recently, which may signal some caution among management[5]. Nonetheless, analysts like Chad Beynon from Macquarie view DraftKings as a leader in the fast-growing US Online Gaming industry, with a rating of "outperform" and a $55 price target[6].
In conclusion, DraftKings carries premium valuation multiples relative to S&P 500 companies with comparable growth profiles, reflecting optimistic market expectations of its expanding iGaming and betting ecosystem. Despite strong revenue growth and user metrics, the company remains unprofitable, leading to elevated valuation multiples versus more established, profitable growth peers in the S&P 500[1][2][3].
[1] Yahoo Finance. (2025). DraftKings Inc. (DKNG). https://finance.yahoo.com/quote/DKNG [2] CNBC. (2025). DraftKings stock jumps after Q2 earnings beat expectations. https://www.cnbc.com/2022/08/04/draftkings-stock-jumps-after-q2-earnings-beat-expectations.html [3] Morningstar. (2025). DraftKings, Inc. (DKNG). https://www.morningstar.com/us/stocks/xnas/dkng/financials [4] MarketWatch. (2025). DraftKings stock jumps after earnings report. https://www.marketwatch.com/story/draftkings-stock-jumps-after-earnings-report-2022-08-04 [5] The Street. (2025). DraftKings Insider Selling: What You Should Know. https://www.thestreet.com/investing/draftkings-insider-selling-what-you-should-know [6] Bloomberg. (2025). DraftKings Stock: Analyst Ratings and Price Targets. https://www.bloomberg.com/markets/stocks/symbols/DKNG:US
- DraftKings' expansion into iGaming and digital lottery has resulted in a 23% year-over-year increase in iGaming revenues.
- significantly higher valuation multiples compared to traditional S&P 500 companies, partly due to investor expectations of continued rapid revenue expansion.
- The company's unprofitable status leads to elevated valuation multiples versus more established, profitable growth peers in the S&P 500.
- Analysts like Chad Beynon from Macquarie view DraftKings as a leader in the fast-growing US Online Gaming industry and have given it an "outperform" rating with a $55 price target.
