Draftkings Inc (NASDAQ: DKNG) stock price is down 19.17% in the past month despite getting an extension to acquire the UK betting Group Entain Plc.
The US betting company’s stock has bounced off a significant resistance level and was headed lower before the announcement on September 21, 2021, which drove its shares lower.
It appears investors are not very keen on the tie-up between the two betting companies, as evidenced by the downtrend that ensued after the news broke.
However, there might be a silver lining to the whole issue since Draftkings’ stock appears to have bottomed at the start of October and have been trading sideways even since.
Draftkings was yesterday granted a reprieve by the UK competition watchdog to make a firm offer for Entain. Many expect an offer price of up to $22.4 billion if negotiations between the two companies thrive.
The betting giant said that it is still in discussions with the Etain board. However, the firm reassured investors and customers that it was still focused on growing its market share in the competitive North American market.
In January, the Entain board rejected a previous bid from MGM Resorts, saying that the $11 billion offer grossly undervalued its business. Many are unsure what to expect from the board now that the current offer is more than twice the MGM offer.
Draftkings may also face opposition from MGM Resorts, a lucrative joint venture with Entain in the US, since the acquisition would mean that the two rivals would have to work together on the joint venture.
Currently, the sideways trading in Draftkings stock price indicates that the markets are patiently waiting for a firm offer and its acceptance before investors make their next move on the stock. Therefore DKNG stock could break out in any direction at this point.
I bet that DKNG stock will rally once a firm offer is approved by the Entain board, which will expand the company’s presence in the UK and would be earnings accretive from the very beginning.
*This is not investment advice.
Draftkings stock price.
Draftkings stock price is down 19.17% in the past month despite getting an extension to complete the Entain takeover.
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Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading