New York, USA – 15 February 2021: DraftKings website in browser with company logo, Illustrative Editorial

The DraftKings stock price rose by more than 2% on Monday even as other gambling stocks like Churchill Downs, Boyd Gaming, and Penn National crashed by more than 3%. The DKNG stock rose to $44.65, bringing its total market capitalization to more than $17 billion.

DraftKings shares rise

DraftKings is a leading entertainment company that provides fantasy sports and sports betting services to customers mostly in the United States. The company has more than 5.5 million customers and annual revenue of more than $654 million. It expects to cross the $1 billion revenue in 2021.

The DraftKings stock price has struggled this year. Its shares have dropped by almost 40% from their year-to-date high. This decline is notable considering that sports are expected to bounce back as more states ease their restrictions.

The stock decline is partly because of a recent short-seller report on DraftKings. In a report, Hindenburg Research accused the company of operating in the black market industry through its SBTech company. The analysts said that most of SBTech revenues came from operating in industries that are illegal. The company refuted these claims saying that it had done enough due diligence before acquiring the firm. 

They also noted that DraftKings regularly spends a lot of money in marketing or in customer acquisition. These customers will likely not be loyal to the firm in the long run.

Hindenburg Research has been accurate several times before. Some of its past targets are companies like Nikola Motors, Lordstown Motors, and Clover Health. 

The DraftKings stock price rose on Monday even as the rest of the stock market tanked. The Dow Jones index rose fell by more than 850 points while the S&P 500 and Nasdaq 100 indices fell by more than 1.50% and 1.40%, respectively.

This jump is possibly because of hopes that the stock will bounce back after it fell by more than 39% from its year-to-date high. It is also probably because of the rising activity in social media, where DraftKings was trending. It trended in platforms like Reddit and StockTwits. So, what next for the DraftKings share price?

DraftKings stock price analysis

Draftkings Stock Price

In my last article on Draftkings stock price, I recommended against investing in the stock citing the negative press after the Hindenburg report. This prediction was right as the stock has dropped substantially since then.

Today, turning at the daily chart, we see that the shares have declined below the 100-day and 50-day moving averages, signalling that bears are in total control. We also see that the shares are slightly above the 50% Fibonacci retracement level.

It is also below the neckline of the double-bottom pattern. Therefore, the key level to watch will be the support at $39.80. Any move below this support will signal that bears have prevailed. As a result, the stock will continue falling as bears target the next key support at $34.35, which is along the 61.8% Fibonacci retracement level.

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