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DraftKings Stock Is a Terrific Sports-Focused Metaverse Investment

InvestorPlace - Stock Market News, Stock Advice & Trading Tips Once a momentum play, DKNG stock should now appeal to value hunters and risk-tolerant contrarians seeking exposure to the NFT...

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This story originally appeared on InvestorPlace

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Investorplace.com - InvestorPlace

It seems like ages ago that digital sports entertainment and gaming company DraftKings (NASDAQ:DKNG) was a darling of the markets. Today, however, the selling pressure with DKNG stock far outweighs the buying pressure.

DraftKings (DKNG) logo, magnified, on its app.
Source: Lori Butcher/Shutterstock.com

So, should prospective investors consider DraftKings to be an underappreciated gem, or a toxic business? It all depends on your tolerance for risk, as well as your outlook on the future of the metaverse and the non-fungible token (NFT) industry.

Plus, DKNG stockholders should be willing to accept DraftKings’ shifting business model. Sure, DraftKings is still an e-sports/i-gaming company, but it’s now evolving into the “built worlds” of the metaverse.

If you’re not on board with that, then DraftKings probably won’t appeal to you in 2022. Yet, I would encourage you to embrace the NFT trend instead of trying to resist it — and DraftKings is clearly seeking to make its mark in this potentially lucrative niche market.

A Closer Look at DKNG Stock

A year ago, DNKG stock was a “momo” or momentum stock. Some folks would have also called it a growth stock, as the share price was certainly growing quickly.

It peaked at $74.38 in March of 2021, thereby providing multi-bagger returns to DraftKings’ early investors. In hindsight, however, it’s evident that rallies of that magnitude are difficult to sustain.

Unfortunately, DKNG stock has been in a state of decline since September. For the stock to trade near $25 was once unimaginable, but here we are.

At this point — and given the technical destruction that’s taken place over the past several months — it’s not realistic to expect the DraftKings share price to return to the $70s anytime soon.

Benchmark analyst Mike Hickey issued a $50 price target on the stock. That price level should be attainable in 2022, assuming the selling pressure subsides at some point.

Early Innings

In DraftKing’s recently released investor presentation, it’s evident that this is a company in transition.

The shift towards the metaverse and the NFT industry is undeniable. The company has declared the early innings of DraftKings Marketplace a success — and NFTs will undeniably continue to populate this tech-enhanced platform.

Of course, there will often be a sports connection here. For instance, DraftKings Marketplace launched with the drop of Premier Edition Tom Brady NFTs, provided by Autograph.

It’s not all about sports, however. Autograph teamed up with Lionsgate, Twisted Pictures and DraftKings to release SAW movie themed NFTs on Marketplace.

These were the first non-sports digital collectibles on the DraftKings platform — and the SAW  NFTs sold out within minutes. These truly could be the early innings, as DraftKings is considering the possibility of minting its own NFTs in the future.

Gamified NFT Collaboration

In addition, DraftKings plans to work with a pair of partners to help combine the excitement of football with the tech-enhanced metaverse. Reportedly, DraftKings is partnering with the NFL Players Association and OneTeam Partners to launch gamified NFT collections.

These collections will debut on DraftKings Marketplace during the 2022-2023 NFL season. For this purpose, DraftKings will have licensing rights for active NFL players, including the authentic use of names, images and likenesses.

Sean C. Sansiveri, general counsel and head of business affairs at NFL Players Inc., the marketing and licensing arm of the NFL Players Association, celebrated this opportunity to combine sports and the emerging metaverse.

“We look forward to integrating NFL players into DraftKings’ NFT experience to create authentic connections for avid fans,” Sansiveri said.

The Bottom Line

Today’s traders should be realistic about DNKG stock. It’s not likely to revisit its prior peak anytime soon.

However, a price target in the $50 range isn’t out of the question. After all, DraftKings is expanding its business model, and this could enhance the company’s value proposition.

So, if you’re on board with DraftKings’ ambitious venture into NFTs and the metaverse, feel free to consider a position in the stock shares.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. 

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The post DraftKings Stock Is a Terrific Sports-Focused Metaverse Investment appeared first on InvestorPlace.