The report was mixed, with DraftKings beating on revenue and growing sales 23.6% year over year but missing on earnings. A loss of 55 cents a share came in well wider than estimates.
However, the company’s full-year revenue guide was better than expected. Given that the market tends to be forward looking rather than focused on the past - i.e. guidance tends to trump the quarterly results - some bulls are hopeful of a reverse.
They also know DraftKings may have the wind at its back. Penn National Gaming (PENN) - Get Report is enjoying a fresh breakout, while Wynn Resorts (WYNN) - Get Report, MGM Resorts (MGM) - Get Report and others have been doing well lately too.
Unfortunately, the charts aren’t as clear for DraftKings as some of its peers.
Trading DraftKings Stock
Investors with a longer-term outlook could look at DraftKings and say it is forming one big bull flag. That’s after the stock’s rapid rise from to the June high near $44. Seeing a stock consolidate in this manner is not a bad thing.
In fact, many will argue that it’s a good thing and I don’t disagree. Perhaps that works fine for investors, but for traders, we need a bit more clarity.
This stock has been making a series of higher lows and lower highs, wedging it into a tighter and tighter trading range. For now, the 20-day and 50-day moving averages are rejected DraftKings stock on a bearish post-earnings reaction.
So here’s what I want to know now: Does DraftKings stock rotate below the current month’s low at $30.51 or the high at $36.17?
Above the high puts shares back above its key moving averages and puts $38 resistance in play. Above that opens the door toward the highs near $44.
Below this month’s low puts the July low and recent range support in play near $27.50. Buy-the-dip traders can consider nibbling near this level with a clear risk/reward profile. Below the July low puts the low- to mid-$20s on the table.