After months without live sports, it looks as though America’s favorite pastimes are on the cusp of returning. Reports indicate the MLB is on pace to return sooner rather than later, while the NHL and NBA have also submitted plans to resume their playoffs this summer.
Financially, the resurgence of players in arenas may mean the resurgence of players in the stock market as well. Here are four stocks that may be poised for a breakout with the return of live sports.
DraftKings Inc (NASDAQ: DKNG) is new to the market, debuting in early April at around $19. Since then, it's climbed over 70% to $33 a share.
Much of the hype surrounding DraftKings has to do with continuous pro-gambling legislation being pushed throughout the country. Given the gambling industry's potentially massive contribution to the government, more and more states are entertaining the possibility of legalizing it.
More good news for the online fantasy and gambling app is the new trend for people to gamble on non-sporting events, such as the outcome of TV shows like "The Bachelor."
Chris Camillo said DraftKings' potential comes as a result of the exponential growth in legality and popularity of online sports gambling.
"I think you can make a case that most states are going to have legalized sports books in the next five, six, seven years. So this is a movement. This is a major, major movement."
Prior to the absence of sports, people were betting on games more than ever. The hiatus likely created an immense desire to get back to the action.
Penn National Gaming
Penn National Gaming (NASDAQ: PENN) is one of the most interesting stocks in the gaming and entertainment industry.
Penn operates both brick-and-mortar and online gambling to a plethora of users. It owns 41 facilities, which comprise 50,500 gaming machines, 1,300 table games and 8,800 hotel rooms. Perhaps the most exciting element of Penn National is its recently-inked partnership with Barstool Sports.
Barstool Sports has been a leading sports and men's lifestyle blog and podcasting network over the past few years.
The agreement between Penn and Barstool paves the way for Penn to be the operator of a Barstool Sports gambling app. Given Barstool's incredible reach and audience (three top 60 podcasts in the U.S.), the app will surely explode on the scene.
"Penn's got the bigger growth in the future (as compared to other gaming companies on the market)," Jordan Mclain said on the "Dumb Money LIVE" show. "I think they've got a brand they can capitalize on."
Gan Ltd (NASDAQ: GAN) is an extremely under-the-radar stock that also operates in the sports gaming space. It IPO’d on May 5 at just over $10. The small-cap stock has since risen above the $15 handle, representing about 50% returns in its first month on the market.
Gan's core business centers around a subscription revenue model. Its software allows it to take a piece of the action on every bet or gamble for the gaming companies that it works for. Its most notable client is likely FanDuel, an international competitor to DraftKings.
One of the company’s more notable elements is that it owns a patent on the ability for a casino that has an offline brick-and-mortar presence with an offline loyalty program to merge that with an online loyalty program.
In fact, it won a 2018 court case in which it sued for the wrongful usage of this patent, which has further solidified its viability and credibility.
According to Camillo, Gan has the potential to be in the right place at the right time with the return of sports.
"I see Gan as an asymmetric trade on the imminent growth of legalized app-based sports and casino wagering in the U.S.," Camillo said.
"While most investors in this space are focused on DraftKings, FanDuel, MGM, and the soon to be Barstool Sportsbook by Penn National — GAN’s platform software and services solution along with their leadership experience in the sector position them to come out as the real winner in what is likely to grow into a fragmented market of state-licensed casino and sportsbook brands that are equally technology and process deficient "
Gan will be able to leverage this patent to work with casinos in developing the aforementioned online loyalty programs, which could be a huge boost. Investors seem to be taking notice of this, along with the general rise of the gambling industry in general, as good signs for Gan.
Walt Disney Co
Disney (NYSE: DIS), like most of the market, suffered a significant drop in share valuation as a result of the coronavirus pandemic. The stock has dropped roughly 15% in price since the end of February, when it hovered just over the $140 handle.
With the resurgence of sports back on the scene in the coming weeks and months, it's plausible to expect the viewership of ESPN to surge. The channel owns rights to multiple NBA and MLB games per week.
ESPN's typical programming, which comprises mostly talk shows, will finally be able to recap highlights and statistics from the previous day once again after months of having to cover general topics and trends, such as the NFL's new collective bargaining agreement.
Camillo mentioned on the "Dumb Money LIVE" show that Disney looks like a safe play with the return of sports.
"It's gonna be a net positive for Disney. It's kind of undebatable...I'm comfortable with my Disney position for the long term," he said.
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