馃攳
馃槑 DKNG Stock | Cathie Wood Bets Big on Draftkings Stock - YouTube
Channel: Ticker Symbol: YOU
[0]
we've got some breaking news right now
[1]
draftking shares they are plunging right
[3]
now hindenburg research just out with a
[5]
new short call on the stock it's based
[7]
on alleging that the merger with
[9]
bulgaria's sb tech brought exposure to
[12]
extensive dealings in black market
[14]
gaming money laundering and organized
[16]
crime i'm back with another drama filled
[19]
and volatile tech company and this time
[21]
i'm raising the stakes a little over a
[23]
week ago hindenburg research the firm
[26]
that helped expose the fraud at nicola
[28]
released a short report about draftkings
[30]
ticker symbol dkng which is one of
[33]
arkhanvest's top 25 holdings they
[35]
alleged all sorts of criminal activity
[38]
ranging from black market gaming to
[40]
money laundering and other forms of
[42]
organized crime what did kathy would do
[44]
in response
[45]
buy another 42 million dollars worth of
[48]
shares
[48]
so in this episode i'm shining a light
[51]
onto one of arkhanvest's biggest bets so
[53]
that we can decide whether or not this
[55]
stock is worth the gamble if you enjoy
[58]
this type of commentary and analysis
[60]
consider liking this video and
[61]
subscribing to the channel with all
[63]
notifications turned on that way you'll
[66]
be the first to know when i come out
[67]
with new research regardless of how
[69]
youtube tunes its algorithm let's roll
[71]
the dice arc invest has been buying
[73]
massive amounts of draftkings since the
[76]
rotation out of growth stocks began
[78]
draftkings is now the 19th biggest
[80]
position in arc w arc invests fund
[82]
themed around the next generation of
[84]
internet applications it's the 27th
[87]
biggest position in arcf their fintech
[89]
etf and number 18 in rk arkhamvest's 22
[93]
billion dollar flagship fund filled with
[95]
their highest conviction stocks if you
[97]
combine their six actively managed funds
[100]
draftkings is their 21st biggest
[102]
position overall with almost 600 million
[105]
dollars in it notably about seven
[107]
percent of arc's position or 42 million
[110]
dollars was bought in response to the
[111]
short seller report put out by
[113]
hindenburg research most short reports
[116]
are published with one goal in mind to
[118]
scare investors with weak hands into
[120]
selling their shares at bargain basement
[122]
prices they often do this by making big
[125]
claims that either end up being
[126]
misleading or insignificant hindenburg
[129]
research reports are usually neither of
[131]
these things because instead they often
[133]
allege outright fraud like they did with
[135]
nicola but this one doesn't do that it
[137]
mostly alleges some shady dealings by sb
[140]
tech a betting engine that combined with
[142]
draftkings during their spac merger last
[144]
year and focuses on draftkings high
[146]
valuation despite the risks and
[148]
regulatory hurdles associated with
[150]
online gambling while pointing out that
[153]
they still have negative earnings so
[155]
that will be the outline for this
[156]
episode what do draftkings and sp tech
[159]
do today what is the deal with
[161]
arkhanvest's crazy high conviction in
[163]
this stock and what do their future and
[165]
finances look like based on trends in
[167]
state regulations surrounding sports
[169]
betting and gambling let's start with
[171]
kathy wood's outlook on draftkings which
[173]
she talked about on episode 9 of
[175]
benzinga's raz report earlier this year
[178]
well we do think sports betting
[181]
is is actually has is losing its taint
[185]
uh draftkings is becoming a platform uh
[188]
for sports betting uh states in crisis
[193]
uh with huge deficits are going to
[195]
capitulate one after another and then
[197]
the most one of the most mature
[200]
uh betting uh states new jersey
[203]
uh
[204]
it's
[205]
draftkings reported last uh last week
[208]
its revenues were up a hundred percent
[211]
again this was another stay-at-home
[213]
beneficiary so people said ah you know
[216]
you know we're going to get back to life
[217]
as usual this is going to be part of
[220]
life
[221]
as usual
[222]
and so
[223]
new jersey was very telling to us to us
[225]
and and we do believe that it is
[227]
platform strategy in the space okay so
[230]
let's discuss the numerous tailwinds
[231]
kathy wood just mentioned we're seeing a
[233]
big cultural shift in the acceptance of
[235]
sports betting in general and online
[237]
betting specifically we're also seeing
[239]
states with big deficits loosen up on
[242]
regulations about betting in order to
[244]
access a new taxable revenue stream this
[246]
is on top of more and more forms of
[248]
entertainment moving online in the face
[250]
of the pandemic as real-life options
[252]
became more limited we all get that but
[255]
that's on top of adults spending more
[257]
time per day on their mobile devices
[259]
each and every year even before the
[261]
pandemic began sure that growth rate
[263]
will slow in the future but only because
[265]
all of that growth moved up to 2020 the
[268]
reason all of these matters is because
[270]
draftkings is a leading mobile online
[273]
betting platform and all of those words
[275]
are contributing to their massive growth
[277]
rate i agree with kathy wood surprise
[280]
surprise that a lot of these factors
[282]
will become a part of life as usual even
[284]
as things open back up however i'm
[286]
trying to be better about backing my
[288]
opinion with data instead of just
[290]
putting my biased pro technology views
[293]
on stay at home stocks out there so
[295]
let's listen to draftkings ceo jason
[298]
robbins talking about these same factors
[300]
and how draftkings future is affected by
[302]
the reopening economy on cnbc's tech
[305]
deck and the season at large
[307]
as this economy reopens i guess can you
[310]
put into perspective
[311]
the the tailwinds that you're expecting
[314]
for the rest of the year relative to
[316]
where we thought we were going to be say
[318]
about six months ago
[319]
well you saw some of that in q1 we had
[321]
an incredible quarter um really just you
[324]
know hit on all cylinders and
[327]
so happy with all the metrics and
[328]
results that we deliver we also did a
[330]
ton on the strategic relationship side a
[332]
lot of products that we release we have
[334]
some upcoming social features which i
[336]
think are going to be game changing so
[338]
you know as far as the rest of the year
[339]
goes i think that as you see people you
[342]
know hopefully return to more of
[344]
whatever normal looks like
[346]
you know we haven't seen any adverse
[348]
impacts so far as more vaccinated people
[350]
get out and about obviously we think we
[352]
had some benefit from you know more of
[354]
stay at home and things like that but so
[357]
far we haven't seen any loss of momentum
[359]
so
[360]
we're certainly being appropriately
[361]
cautious about what that could look like
[363]
but everything we're seeing in the data
[365]
suggests that strong momentum is
[366]
continuing and we you know feel like we
[369]
are well lined up to have a great last
[371]
few quarters of the year my expectation
[373]
is that these trends will continue and
[375]
as investors that's what we should look
[377]
for in future earnings reports so let's
[379]
talk about sb tech which is draftkings
[381]
betting engine and the major focus of
[383]
the hindenburg research short report sp
[386]
tech allows draftkings to have their own
[388]
predictive betting engine instead of
[389]
having to rely on an existing outside
[392]
service this isn't really about cost
[394]
cutting it's about being vertically
[395]
integrated and having the ability to
[397]
offer tailor-made bets that are unique
[399]
to draftkings and can hyper-target
[401]
individual users this is about adding
[404]
market differentiation and increasing
[406]
user retention and it sounds great on
[408]
paper but just how important is sb tech
[411]
to draftkings's long-term success here
[413]
is some much needed context from none
[415]
other than jim cramer on a recent
[417]
episode of cnbc's market alert did you
[420]
look at draftkings by the way since we
[422]
talked about it yesterday yeah right we
[424]
had the hindenburg report and then we
[426]
had another report that kathy wood
[428]
bought 900 000 shares 42 million dollars
[431]
worth how many divisions not
[432]
insignificant you know hindenburg this
[434]
is i think may not look again i've
[436]
worked for jeff king's i i think jason
[438]
roberts runs an outfit where he
[440]
literally could take this one division
[442]
and just sell it to somebody for a
[444]
dollar and then hindenburg st
[447]
and then hindenburg would have to say
[448]
you know what no harm no foul stock goes
[450]
higher
[452]
all jason has to do is get rid of that
[453]
one division but you could i think that
[456]
what matters with draftkings
[458]
is gambling
[460]
whether more people will gamble
[462]
and whether they have a low cost of
[463]
acquisition that's what matters not this
[466]
division that they can get rid of
[467]
tomorrow so kathy wood i think
[469]
ultimately is going to be right if you
[470]
have a look if you have an nfl season
[472]
where more people want to gamble do you
[474]
think we're going to remember this
[475]
little division that's eight percent of
[476]
their business no
[478]
i actually think that jim cramer is spot
[480]
on here hindenburg research is alleging
[482]
that sb tech is involved in black market
[484]
gaming money laundering and organized
[486]
crime these are serious accusations as
[489]
both jim cramer and the report itself
[491]
point out sb tech accounted for about 25
[494]
of draftkings revenue at the time of
[496]
their merger in april of 2020 and
[499]
accounts for less than 10 percent today
[501]
just a little over one year later by
[503]
draftkings's own projections it could be
[506]
less than four percent of their total
[507]
revenue when they're fully up and
[509]
running even if these allegations were
[511]
true unless we find out that draftkings
[513]
knowingly profited from these illegal
[515]
activities and the government gets
[517]
involved or draftkings partners start to
[519]
leave i don't really see these
[521]
allegations as meaningful if something
[523]
extreme does happen i'll be sure to
[524]
update my own investment thesis and make
[527]
another episode to update you as well
[529]
the hindenburg report also included some
[531]
points that make me feel like it's much
[533]
more designed to tank at draftkings
[535]
stock price than to expose serious
[537]
criminal activity here's the second to
[539]
last bullet point in the intro we spoke
[541]
with several industry experts and
[543]
competitors who questioned the viability
[545]
of draftkings's model of aggressively
[547]
burning cash on promotion and marketing
[550]
to acquire customers in the near term
[552]
despite a lack of evidence of long-term
[554]
customer brand loyalty in a recent
[556]
episode i talked about skills ticker
[558]
symbol sklz another online gaming
[561]
company that recently had several short
[564]
reports tank its stock price just like
[566]
with draftkings i also shared my
[568]
research about how i concluded the
[569]
findings in those short reports were
[571]
pretty insignificant i'll leave a link
[573]
to that episode in the top right hand
[575]
corner of your screen right now and in
[577]
the description below as well the reason
[579]
i'm mentioning skills here is because
[581]
both companies have the same kind of
[583]
unit economics they spend money on
[585]
marketing to acquire new customers those
[588]
are customer acquisition costs or a cac
[590]
and they end up being paid up front
[593]
separately they spend money to
[594]
incentivize existing customers to spend
[596]
more money over time those are customer
[599]
retention costs and they accrue with
[601]
every little promotion and cross-sell so
[603]
all customer acquisition costs are
[605]
marketing costs but not all marketing
[608]
costs are customer acquisition costs in
[610]
my opinion all of these short reports
[612]
for draftkings and skills are making the
[614]
same big mistake as a result i really
[617]
agree with what jim cramer thinks
[619]
investors should be focused on how many
[621]
states legalize online sports betting
[623]
and casino gaming how many of the people
[625]
in those states draftkings can acquire
[627]
with their first mover advantage and
[629]
their actual customer acquisition costs
[632]
in doing so here's a clip from cnbc's
[634]
squawk box from mid-june where jason
[636]
robbins talked about their rapidly
[638]
expanding total addressable market and
[640]
their declining customer acquisition
[642]
costs what are you doing to try and make
[644]
sure that you don't see a slow down i
[646]
know your marketing budget
[648]
soared in the first quarter that was
[649]
something that was a little off setting
[651]
to some investors who worried about that
[653]
thought maybe you guys would turn more
[654]
profitable earlier
[656]
are you spending more on marketing
[657]
because you want to make sure you hold
[658]
on to your to your
[660]
customers that you picked up during the
[661]
pandemic no not at all we spend on
[663]
marketing primarily for customer
[665]
acquisition it's all data driven we look
[668]
at customer acquisition on a horizontal
[670]
basis if we can acquire customers with
[672]
the right roi and the right payback
[674]
periods that we feel
[676]
are appropriate for our stage of
[678]
business then we'll do it we actually
[680]
are way under our target for cac so
[684]
we actually are trying to find more ways
[686]
to spend marketing profitably it's
[688]
really amazing that we've been able to
[690]
increase spend so much and are acquiring
[692]
customers more efficiently than before i
[694]
do think that itself might be a little
[696]
bit of a function of the stay-at-home
[698]
nature of the pandemic so we'll see if
[699]
that continues i don't necessarily think
[702]
there'll be any impact to the retention
[704]
side but i could see a little bit of a
[706]
slowdown customer acquisition but
[707]
there's so much growth right now in the
[708]
industry new states are opening up five
[710]
or six states have already passed laws
[712]
this year i don't think anything is
[714]
really going to be noticeable maybe
[716]
instead of growing you know triple
[718]
digits it's 80 90 or something like that
[721]
but i don't think that we're going to
[722]
see anything material we can see this in
[724]
draftkings's data as well it always
[726]
costs more to acquire a customer who
[728]
doesn't know your business than it does
[730]
to retain a customer once they've
[732]
already spent money with that same
[733]
business customer acquisition costs are
[736]
going to be high in states that have
[737]
just legalized these activities because
[739]
everyone in them will be new to illegal
[741]
online sports betting in general and
[743]
draftkings specifically as more and more
[745]
people become returning customers over
[747]
time customer acquisition spend goes
[749]
down and customer retention spend goes
[752]
up so overall marketing spend per person
[754]
goes down over time as it turns out a
[756]
customer that's been with draftkings for
[758]
one year or four fiscal quarters ends up
[761]
paying back about 70 of the money it
[764]
costs to acquire them a customer that's
[766]
been with them for two years or eight
[768]
fiscal quarters pays back over 250
[770]
percent of that customer acquisition
[772]
cost one call-out i want to make is that
[775]
draftkings only has two cohorts that are
[778]
over eight quarters old so we should
[779]
really pay attention to how these
[781]
numbers change in the next few quarters
[783]
because two isn't exactly a huge sample
[785]
size jason robbins also talked about new
[788]
game-changing social features in the
[790]
near future users will be able to make a
[792]
profile page a friends list receive
[794]
notifications comment on the activities
[796]
of other users and of course record and
[799]
share the bets they make across the
[800]
draftkings platform in my opinion words
[803]
like platform and ecosystem are
[805]
incredibly important to arc invest
[807]
because they can leverage powerful
[809]
advantages for example draftkings has
[811]
built a suite of integrated apps for
[813]
paid fantasy sports online sports
[816]
betting or osb and igaming which are
[818]
casino games like blackjack and slots
[821]
one reason there are three separate apps
[823]
is because those activities might be
[825]
regulated differently in each state so
[827]
there are nuances when it comes to what
[829]
draftkings can offer promote cross-sell
[832]
and so on within each app the thing is
[834]
they only have to spend money to acquire
[836]
a user on one of those offerings then
[838]
they can pay much less to get them to
[840]
spend over time including having them
[842]
try the other offerings since they're
[844]
already on the platform the draftkings
[846]
integrated platform allows them to use
[848]
data from each one of these apps to
[850]
target ads and personalize experiences
[852]
on any one of them for example if a
[855]
young man in new jersey has 20 dollars
[857]
in his draftkings wallet and draftkings
[859]
knows he likes ufc fighting and football
[861]
draftkings can offer him entry into a
[863]
ufc-themed prize pool in fantasy sports
[866]
a specific sports bet on conor
[868]
mcgregor's upcoming ufc fight and for
[871]
him to try a football-themed blackjack
[872]
game while he's waiting for that fight
[874]
to start and tactics like that are
[876]
working 57 percent of online sports
[879]
betting users also placed a casino bet
[881]
in 2020 largely because of these types
[884]
of cross-sells from one app to the other
[886]
draftkings currently has 26 games that
[888]
were built in 2019 and 2020 and are
[891]
planning to watch another 20 games in
[893]
2021 going the other way being able to
[895]
offer tailor-made online sports bets to
[898]
people inside their casino games is
[900]
probably going to be just as beneficial
[902]
to draftkings in the long run their
[904]
third app daily fantasy sports or dfs is
[907]
also a significant source of data for
[909]
opportunities for future cross-selling
[911]
their dfs paid user database has over 5
[914]
million unique users over 43 states and
[917]
draftkings expects to cross-sell more
[919]
than 50 percent of them as new states
[921]
legalize online sports betting or casino
[923]
gaming for many states their cross-sell
[926]
rate is closer to 60 percent this is
[928]
another very powerful platform effect
[930]
when it comes to the vision of
[932]
draftkings future which i usually talk
[934]
about up front i think it will be just
[936]
more of the same and that's not a bad
[938]
thing draftkings is a pure play platform
[940]
they offer a very niche set of
[942]
activities with strict rules and
[944]
regulations that vary state by state and
[946]
country by country as more parts of the
[948]
world pass favorable legislation
[950]
draftkings will create new sets of
[952]
tailored content for the new
[953]
demographics that come with entering
[955]
these new markets as more sports leagues
[957]
and competitive games find themselves
[959]
increasingly focusing on interactive
[961]
experiences and mobile content which is
[963]
the current trend draftkings offers a
[965]
serious avenue for partnerships and
[967]
licenses similar to skill stock they can
[970]
also partner with other companies to
[972]
offer joint rewards or cross-promote
[974]
services if you win your next bet your
[976]
next uber eats delivery is on us
[978]
ultimately the thing i like most about
[980]
draftkings is they're a digitally native
[982]
data-driven company that's disrupting a
[984]
primarily in-person industry just like
[987]
square is doing with banks and teledoc
[989]
is doing with traditional healthcare
[990]
draftkings could one day do with casinos
[993]
and betting rings it's still pretty
[994]
early in the race but as time passes
[996]
draftkings could really be a horse worth
[998]
betting on i hope this episode helped
[1000]
you learn a little bit about what
[1002]
draftkings and sb tech do today the
[1004]
tailwinds that are causing arkhanvest's
[1006]
crazy high conviction and what their
[1008]
future could hold despite hindenburg's
[1010]
short report if it did let me know by
[1012]
investing in the like button and
[1014]
subscribing to the channel with all
[1015]
notifications turned on that's a great
[1018]
way to invest in the channel that
[1019]
invests in you until next time this is
[1022]
ticker symbol u my name is alex
[1024]
reminding you that the best investment
[1026]
you can make
[1028]
is in you
[1042]
you
Most Recent Videos:
You can go back to the homepage right here: Homepage