Is DraftKings (DKNG) Trading at an Attractive Multiple?

3 hours ago 1

Soumya Eswaran

Thu, May 7, 2026 astatine 7:23 AM CDT 3 min read

Baron Capital, an concern absorption company, released its Q1 2026 capitalist missive for the “Baron Discovery Fund”. A transcript of the missive tin beryllium downloaded here. It was a hard 4th for Baron Discovery Fund, some connected an implicit and comparative basis. The Fund declined 10.65% (Institutional Shares) successful the quarter, compared to the Russell 2000 Growth Index’s instrumentality of -2.81%. The underperformance of 7.88% was chiefly attributed to sectors specified arsenic Information Technology, Consumer Discretionary, Health Care, and Industrials, on with a deficiency of vulnerability to Energy. The Fund sees the existent SaaS-pocalypse arsenic an accidental to put successful compelling prospects among bundle companies that person robust and sustainable competitory advantages. In addition, delight cheque the Fund’s apical 5 holdings to cognize its champion picks successful 2026.

In its first-quarter 2026 capitalist letter, Baron Discovery Fund highlighted stocks similar DraftKings Inc. (NASDAQ:DKNG). DraftKings Inc. (NASDAQ:DKNG) is an American integer sports amusement and gaming company. On May 6, 2026, DraftKings Inc. (NASDAQ:DKNG) closed astatine $23.92 per share. One-month instrumentality of DraftKings Inc. (NASDAQ:DKNG) was 7.51%, and its shares mislaid 32.33% implicit the past 52 weeks. DraftKings Inc. (NASDAQ:DKNG) has a marketplace capitalization of $11.86 billion.

Baron Discovery Fund stated the pursuing regarding DraftKings Inc. (NASDAQ:DKNG) successful its Q1 2026 capitalist letter:

"DraftKings Inc. (NASDAQ:DKNG) is the starring U.S. integer sports betting and iCasino operator. The banal declined arsenic investors grappled with a guidance scope that implied grip (amount bet) deceleration, elevated prediction markets investments to vie with firms similar Kalshi and Polymarkets, and lingering statement astir structural clasp (the percent of overage nett per bet) sustainability. The header concerns obscure what we judge are beardown fundamentals successful the halfway sports betting concern lawsuit cohorts. Management built 2026 guidance connected level existent hold, a fig that has expanded each twelvemonth successful the industry's history. Parlay mix, the superior mechanical operator of hold, accrued 500 ground points during NFL play and 200 ground points twelvemonth to date. The $800 cardinal EBITDA midpoint besides embeds a $200 cardinal headwind from prediction markets investment, which presently carries nary associated revenue. Excluding that impact, implied halfway concern EBITDA exceeds $1 billion. We judge the banal is trading astatine charismatic multiples comparative to the company’s semipermanent net imaginable and deliberation the full addressable marketplace for prediction markets, portion nascent, has the imaginable to accelerate growth."

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