Do You Believe in the Upside Potential of DraftKings (DKNG)?

Meridian Funds, managed by ArrowMark Partners, released its “Meridian Growth Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S. equity markets made a significant rebound during the quarter, increasing 23% from intra-period lows to close at record highs. Against this backdrop, the fund returned 4.10% (net) compared to the Russell 2500 Growth Index’s 11.31% return. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Meridian Growth Fund highlighted stocks such as DraftKings Inc. (NASDAQ:DKNG). Headquartered in Boston, Massachusetts, DraftKings Inc. (NASDAQ:DKNG) is a digital sports entertainment and gaming company. The one-month return of DraftKings Inc. (NASDAQ:DKNG) was -2.44%, and its shares gained 35.91% of their value over the last 52 weeks. On August 11, 2025, DraftKings Inc. (NASDAQ:DKNG) stock closed at $42.73 per share, with a market capitalization of $21.214 billion.

Meridian Growth Fund stated the following regarding DraftKings Inc. (NASDAQ:DKNG) in its second quarter 2025 investor letter:

“DraftKings Inc. (NASDAQ:DKNG) is a digital sports entertainment and gaming company operating in the U.S. The company parlayed its origins in daily fantasy sports into a top-two market position after online sports betting (OSB) was legalized in 2018. After transitioning from aggressive new bettor acquisition (and relatedly high marketing costs) to more disciplined growth, DraftKings is now delivering significant free cash flow. The stock gained in the quarter after the company reported 20% revenue growth and more than 350% higher EBITDA. We see solid organic growth potential in existing states, as well as the possibility for legalization in new states (only 30 states currently allow OSB and only seven allow online casino gaming). We also see an opportunity for DraftKings to potentially enter the regulated prediction markets in the future. DraftKings was a new position in the quarter.”

Why DraftKings Inc. (DKNG) Crashed On Monday

A woman at a betting table paying out customers who won their sports bets.

DraftKings Inc. (NASDAQ:DKNG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 70 hedge fund portfolios held DraftKings Inc. (NASDAQ:DKNG) at the end of the first quarter, which was 65 in the previous quarter. While we acknowledge the risk and potential of DraftKings Inc. (NASDAQ:DKNG) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DraftKings Inc. (NASDAQ:DKNG) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered DraftKings Inc. (NASDAQ:DKNG) and shared the list of stocks Jim Cramer recently discussed. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.