Tuesday’s U.S. midterm elections are the central focus for markets this week, with U.S. Senate and Congressional seats well as ballot questions in play — including one sports betting question that may boost DraftKings (DKNG) which investors can play via the ARK Next Generation Internet ETF (ARKW).
ARKW holds DKNG at 3.9%, a company with a few key factors in play over the last week leading into Election Day. California is set to vote on Proposition 27 which would allow online and mobile sports betting in the largest state economy in the United States with 39 million people.
While polls show the questions struggling, ballot questions are often a tool used by interest groups to negotiate with state governments and legislatures, helping bring them back to the table. Other states that legalized sports betting are just waiting to launch, with Massachusetts and Ohio adding almost 20 million people to the sports betting market over the next three months.
DKNG surpassed Wall Street estimates with its earnings report last week, with revenue up more than 135% year-over-year with increased guidance for the fiscal year 2022 as highlighted by commentary from ARK Invest. As the stock’s price dropped due to analyst concerns regarding projections of a larger-than-expected EBITDA loss for the fiscal year 2023, the stock may present as a notable buy opportunity with one in five American adults having bet on sports in the last year.
ARKW actively invests in firms poised to benefit from advances in e-commerce, mobile technology, social platforms, and financial technology, holding names like Tesla (TSLA), Amazon (AMZN), and Roku (ROKU) in addition to DKNG.
ARKW charges 83 basis points for its exposures, with its one-month return up 22% compared to its return over the last three months. The ETF, which offers exposure to the DraftKings ballot question results, has seen $9 million in one month in flows as well.
For those investors excited about the prospects of mobile sports betting, ARKW offers a buy opportunity with some key indicators coming in this week on top of strong fundamentals. Should investors disagree with analysts’ EBITDA concerns, they can make a DKNG play via ARKW.
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