Barstool, DraftKings Partnership Could Be Interesting, Says Analyst
On Wednesday, reports surfaced that Barstool Sports and DraftKings (NASDAQ: DKNG) are inwards sophisticated talks regarding a marketing agreement.
While the partnership, which could live proclaimed shortly after the Super Bowl, is expected to be basic in nature, it amounts to Barstool beginner Saint David Portnoy and his crew rejoining the sports betting landscape painting with an boulevard to benefit and make so with I of the largest online sportsbook operators.
Plus, the compounding of Portnoy’s power to tie with jr. bettors and DraftKings’ enviable trademark acknowledgment moth-eaten show potent. Those could live among the reasons analysts prospect the potentiality organisation as potentially intriguing though it potential lacks stuff wallop to DraftKings stock.
We imagine it is too betimes to get meaningful conclusions endorse to DraftKings’ stock, spell there is also no more warrant than an understanding is reached when the lock-up point expires at the end of NFL season,” wrote Stifel psychoanalyst Jeffrey Stantial inwards a note to clients. “Barstool is potential exploring multiple options, and Dave Portnoy has proven a shrewd negotiator. That said, we trust an sole(a) agreement, if reached, farther adds to & illustrates the advantages to scale.”
He rates DraftKings a “buy” with a $45 cost target, which implies upside of 16.3% from today’s close.
Risk/Reward for DraftKings
Last August, after investment $551 million to acquire Barstool Sports, Penn Entertainment sold the accompany support to Portnoy for just now $1 as parting of the regional gambling casino operator’s go to a partnership with ESPN.
Following that deal, Portnoy know his controversial nature may feature cost Penn sports betting licenses inward some states. On a related note, Stantial observed that patch financial risks to DraftKings are low, there is potential for some reputational lay on the line inwards workings with Barstool.
As for the types of bettors Barstool could make for to DraftKings, it’s probable that “stoolies” — the conversational full term for Barstool devotees — are mostly recreational punters.
“High middling handgrip per user for loyal Barstool gamblers seems to infringe with DraftKings’ inclination to circumscribe sharp-worded bettors, though we sensory faculty in that location are potential more squares than sharps inward that high-spending legacy Barstool user cohort,” added Stantial.
Impact to ESPN Bet Worth Monitoring
Data designate that Penn’s recently launched ESPN Bet – the operator’s replacement for Barstool Sportsbook — is outperforming its predecessor. While Barstool Sportsbook’s handle was low-pitched inwards the states inwards which it operated, it’s possible that some stoolies are now ESPN Bet customers and they could transmigrate to another app with the indorsement of Portnoy.
In other words, a Barstool/DraftKings relationship could hold an impact on ESPN Bet and other online sportsbooks.
“We also tone the expiration of Barstool’s lock-up stop and possible marketing partnership with a competitor comes at a time when proving come out ESPN Bet user holding is critical. As such, we testament monitor lizard this evolution nearly both as it relates to our thesis & estimates for DraftKings, as considerably as PENN’s ESPN Bet market apportion & strategy,” concluded Stantial.
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