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Reopening Could Kick Off Live Sports Stocks (DKNG, FUBO, BTDG, CHDN)

The stimulus checks are on their way out the door to the American public. The government announced last week that immunizations are well ahead of schedule since the process was reformed after the new administration took office in January. And life is ostensibly on the way to returning to some form of “normal” for the first time since the pandemic took control of our lives just over a year ago.

One of the hardest hit areas of life and the broad economy over that fateful year has been the live sports industry.

Now that we are on the verge of a return of some semblance of normality, investors may benefit from allocating interest to stocks that stand to directly benefit from this coming transition.

With that in mind, we take a look here at some of the most interesting and active names in the space, including: DraftKings Inc (NASDAQ:DKNG), Fubotv Inc (NYSE:FUBO), B2Digital Inc (OTCMKTS:BTDG), and Churchill Downs Inc (NASDAQ:CHDN).

 

DraftKings Inc (NASDAQ:DKNG) frames itself as an American daily fantasy sports contest and sports betting operator.

The company allows users to enter daily and weekly fantasy sports–related contests and win money based on individual player performances in five major American sports (MLB, the NHL, the NFL, the NBA and the PGA), Premier League and UEFA Champions League soccer, NASCAR auto racing, Canadian Football League, the XFL, mixed martial arts (MMA) and Tennis. It has also recently cut a deal to move into coverage of the UFC market.

DraftKings Inc (NASDAQ:DKNG) most recently announced that it priced a private offering of $1.1 billion aggregate principal amount of 0% Convertible Senior Notes due 2028. The Notes will only be sold to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

According to the company’s release, it also granted to the initial purchasers of the Notes a 13-day option to purchase up to an additional $165 million aggregate principal amount of Notes. The sale is expected to close on March 18, 2021, subject to satisfaction of customary closing conditions. The size of the offering was increased from the previously announced $1 billion aggregate principal amount of the Notes.

Even in light of this news, DKNG hasn’t really done much of anything over the past week, with shares logging no net movement over that period. Shares of the stock have powered higher over the past month, rallying roughly 18% in that time on strong overall action.

DraftKings Inc (NASDAQ:DKNG) recently reported a Q4 (Dec) loss of $0.69 per share, $0.20 worse than the S&P Capital IQ Consensus of ($0.49), but revenues rose 68.6% year/year to $322 mln vs the $232.04 mln S&P Capital IQ Consensus. The company also issued upside guidance for FY21, predicting FY21 revs of $900-1000 mln vs. $867.73 mln S&P Capital IQ Consensus, stating that the increase would reflect strong performance in the fourth quarter of 2020, substantial user activation due to the effectiveness of its 2020 marketing spend, and the launch of mobile sports betting and iGaming in Michigan and mobile sports betting in Virginia.

 

Fubotv Inc (NYSE:FUBO) has been in the sights of prominent shorts. The company frames itself as the leading sports-first live TV streaming platform offering subscribers access to tens of thousands of live sporting events annually as well as leading news and entertainment content. With FuboTV, subscribers can stream a broad mix of 100+ live TV channels, including 42 of the top 50 Nielsen-ranked networks across sports, news and entertainment – more than any other live TV streaming platform.

FuboTV was the first virtual MVPD to stream in 4K. FuboTV was also the first U.S. virtual MVPD to enter Europe with the 2018 launch of fuboTV España. FuboTV launched fubo Sports Network, the live, free-to-consumer TV network featuring live sports and award-winning original programming, in 2019.

Fubotv Inc (NYSE:FUBO) recently announced it has secured market access agreements for its forthcoming fubo Sportsbook in Indiana and New Jersey through Caesars Entertainment Inc. According to the release, the agreements will bring fubo Sportsbook to a minimum of three states at launch following fuboTV’s previously announced market access agreement in Iowa through Casino Queen. fubo Sportsbook is expected to launch in the fourth quarter of this year, subject to obtaining requisite regulatory approvals in each jurisdiction.

“We could not be more excited to bring fubo Sportsbook to market in the fourth quarter, and today’s market access licenses for Indiana and New Jersey will help us reach even more consumers at launch,” said David Gandler, co-founder and CEO, fuboTV.

The stock has suffered a bit of late, with shares of FUBO taking a hit in recent action, down about -3% over the past week.

Fubotv Inc (NYSE:FUBO) managed to rope in revenues totaling $105.1M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 0%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($134.9M against $227.3M, respectively).

 

B2Digital Inc (OTCMKTS:BTDG) is an interesting addition to this list. The company has strong ties to the MMA space as the “development league for Mixed Martial Arts”. While it has seen a recent trend toward skyrocketing brand visibility and success at its live PPV MMA events, the more interesting part of the equation might be its roll-up strategy in the fitness facility space.

As the company builds its brand in the MMA marketplace, it gains traction with aspiring fighters, fans, and fitness consumers as a more serious training and fitness option, which plays well for membership marketing and stickiness. But it all rests on its ability to bolster its brand in the MMA space.

B2Digital Inc (OTCMKTS:BTDG) has recently powered that aspect of its premise with a strong trend of success in its live events. That trend received another shot of strength last week when the company announced that its B2 Fighting Series brand witnessed another stunning night of MMA action in front of a sold-out crowd over the weekend in Cedar Rapids, Iowa.

According to its release, in-person tickets sold out for the event and pay-per-view ticket sales continued to demonstrate a robust upward trend, producing the Company’s best performance in terms of post-pandemic-onset Fight Night single-day revenues and a new Company record in Fight Night margins.

“From top to bottom, this was one of the most exciting B2 Fighting Series events of the year,” commented Brandon ‘Hardrock’ Higdon, the B2 Fighting Series Matchmaker. “We had something for everyone: stunning knock outs, skillful submissions, high-suspense decisions. The sold-out crowd was amazing, and the fighters made sure they got their money’s worth. Nate Williams will be memorable after his body slam knock out. Seth Konen & Bryce Sines both scored crazy walk-off knock outs while standing. Charity LaBuy & Kris Williams both showed dangerous submission skills with first round tap-outs. It was a great night of fights, and I’m super proud of each and every one of the fighters on this card. They all showed up and put it on the line to give our fans a night they’ll never forget.”

B2Digital Inc (OTCMKTS:BTDG) pulled in sales strong sales in its last reported quarterly financials, with top line growth of 126%, and an estimate for that to double again this quarter and then accelerate from there as it stacks up a widening footprint in the gym space, which represents a bigger and bigger channel to the bottom line for its shareholders over the coming 12 months.

 

Churchill Downs Inc (NASDAQ:CHDN) bills itself as an industry-leading racing, online wagering, and gaming entertainment company anchored by our iconic flagship event – The Kentucky Derby. The company owns and operates Derby City Gaming, a historical racing machine facility in Louisville, Kentucky.

It also owns and operates the largest online horse racing wagering platform in the U.S., TwinSpires.com, and sports betting and iGaming through its BetAmerica platform in multiple states. CHDN is also a leader in brick-and-mortar casino gaming with approximately 11,000 slot machines and video lottery terminals and 200 table games in eight states.

Churchill Downs Inc (NASDAQ:CHDN) most recently announced the launch of its TwinSpires Sports mobile app and desktop product in Tennessee. In addition to horse racing wagering, the TwinSpires brand will now offer Tennessee players a platform to bet on professional sports including NBA, NFL, MLB, NHL and PGA, as well as collegiate sports and events from around the world.

“We are excited to launch our state-of-the-art TwinSpires sports betting mobile app in Tennessee just in time for March Madness,” said Bill Mudd, President and COO of CDI. “Tennessee sports enthusiasts will be eligible for our best-ever player sign-up bonus, as well as continued market-leading promotions, all within our industry-leading sports mobile app and desktop product.”

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action CHDN shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -6% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Shares of the stock have powered higher over the past month, rallying roughly 10% in that time on strong overall action.

Churchill Downs, Inc. (NASDAQ:CHDN) generated sales of $278.2M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -17.6% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($121M against $424.2M, respectively).

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