In this article, we discuss 5 Cathie Wood stocks that can rebound in Q4. If you want to see more stocks in this selection, check out 10 Cathie Wood Stocks that Can Rebound in Q4.
5. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 27
Share Price Decline YTD as of August 23: 38.21%
DraftKings Inc. (NASDAQ:DKNG) is a Massachusetts-based digital sports entertainment and gaming company. DraftKings Inc. (NASDAQ:DKNG) stock has gained more than 27% in the last month as of August 23. However, it is still down 38% YTD. The shares rallied amid strong earnings for the second quarter, with a revenue of $466 million, up 56% from last year. This outperformed analyst estimates by $28 million. DraftKings Inc. (NASDAQ:DKNG) reported that average monthly unique B2C customers increased to 1.5 million in Q2, a jump of 30% compared to the same period last year. Securities filings for the second quarter of 2022 reveal that Cathie Wood’s ARK Investment Management owned 25.2 million shares of DraftKings Inc. (NASDAQ:DKNG), worth about $342.5 million, representing 2.02% of the total 13F portfolio.
On August 8, Morgan Stanley analyst Ed Young reiterated an Overweight rating on DraftKings Inc. (NASDAQ:DKNG) and lowered the price target on the shares to $30 from $31 after the company’s Q2 revenues and EBITDA exceeded his estimates by 7% and 35%, respectively. Management seems intent on reducing losses and the analyst lowered his own FY22 EBITDA loss estimate by 8%, informing investors that the “strong quarter” made him more confident in DraftKings Inc. (NASDAQ:DKNG)’s execution. Similarly, on August 17, Roth Capital analyst Edward Engel upgraded DraftKings Inc. (NASDAQ:DKNG) to Buy from Neutral with a price target of $25, up from $18.
Among the hedge funds tracked by Insider Monkey, 27 funds were long DraftKings Inc. (NASDAQ:DKNG) at the end of Q2 2022, with collective stakes worth over $682 million. HG Vora Capital Management is a prominent stakeholder of the company, with 2.5 million shares worth over $29 million.
Here is what Baron Small Cap Fund has to say about DraftKings Inc. (NASDAQ:DKNG) in its Q4 2021 investor letter:
“Shares of DraftKings, Inc. fell in the quarter, as stocks of online gaming companies were under pressure. Sports betting and i-gaming are rolling out with great fanfare and success across the country; however, investors seem concerned about competition and margins. Most participants are spending heavily on marketing and promotions, which is cutting into margins. We see this as a worthy investment in customer acquisition at a moment in time when revenues are just building. We continue to believe that online sports betting and gaming will be enormous industries, and that DraftKings will be a leading player. We think the business will have high margins as it matures. We believe we are underwriting the business conservatively and see much upside in the long term.”
