Our New Low Float Stock Play Is DraftDay Fantasy Sports, Inc. (NASDAQ: DDAY)

Fantasy sports has come to the digital age and it is so popular that it could be about to deliver perhaps the biggest sports investment windfall in Wall Street’s sports sector history. [1]

What began in the 1950s as a simple pastime for competitive friends is now a thriving industry. The simple picking of players and running a contest based on their year-to-date stats has now morphed into something bigger, attracting players ranging in age from 18 to 55. Players spend $465 on average and the player demographic is college educated earning more than $75,000 annually. [2]. Now whole teams and leagues are involved and the result is a fantasy sports industry worth more than $70 billion. [3]

 

Meet The Newly Discovered Fantasy Sports Gem Trading For Less Than $1

The answer to that is a small player in the DFS sector called DraftDay Fantasy Sports, Inc. (NASDAQ: DDAY). Acting both as a player and enabler in the daily fantasy sports market, DDAY has emerged as the ground-floor opportunity of the fantasy sports market in general.

Draft Day Logo

Draft Day Logo

As a player operating in the daily fantasy sports market, DDAY has paid out more than $30M to date. More than 100,000 players help to make up a very strong database and the main website,Draftday.com, and the company has well over 1,000 daily leagues to offer.[4]

The real expansive power and profit potential of DDAY comes from its position as an enabler, however. As a B2B provider of fantasy sports services, DDAY has used its size and technology to help other companies expand into the fantasy sports market.

Fantasy Sports Now Earning More Money Than Traditional Sports?

This is no less than extraordinary when you consider the underlying numbers behind the growth of fantasy sports. The biggest component of the industry is Daily Fantasy Sports (DFS); this component is the engine behind the biggest fantasy sports – football (NFL). A closer look shows that the NFL rakes in around $10 billion annually… How much does the fantasy version of the NFL rake in? Analysts estimate around $11 billion annually. This means that the actual league upon which DFS football is based is shrinking as the fantasy component continues to explode.

The Fantasy Sports Trade Association estimates that over 32 million Americansspend an average of $467 playing fantasy sports of one kind or another. This translates to around $15 billion in actual cash spent. Add in the advertising revenues, merchandising and network partnerships and endorsements and you have the fastest profit-segment perhaps in the history of sports. The annual estimated size of $70 billion is just the beginning; many believe that what is an infant now, could triple, perhaps even quadruple once it matures. That’s growth potential of $280B.

With $70 billion on the table right now and $280B potentially down the road, the next logical question is how an investor can make money from this. How can someone with investing nous capitalize at the ground floor level?

DDAY’s platform is truly global and has the scope that puts it miles ahead of even some of the biggest players in the space. A recent partnership between DDAY and a regulated Australian fantasy sports company are ready to launchDraftstars.com.au. By inking this partnership, DDAY is showing that its platform is truly expansive and is capable of being deployed across all fantasy sports markets.

The investing picture sheds some focus on DDAY’s gain potential. The company has recorded quarterly revenues as high as $7.19M. Year over year revenue growth has been as high as 52%. [5]

Set against the backdrop of the larger fantasy sports companies, DDAY offers the greatest long term growth potential. And when you consider the amount of venture capital (VC) funding pouring into the industry, it’s not hard to imagine DDAY attracting the interest of big-money investors.

Explosive Growth of Fantasy Sports Attracting Venture Capitalists In Droves

Industry Titans

Industry Titans

Investors hoping to capitalize on the growth fortunes of smaller players likeDDAY can use the largest and more established players as benchmarks. One such player is Draft Kings, which last July, managed to raise $300M from VCs at a valuation of $1.2B. [6]

Draft King’s main rival, Fan Duel, managed to raise $275M at a $1B+ valuation. [7]

The wave of funding currently pouring into fantasy sports tells a very bullish tale. How else can one explain the likes of Shamrock Capital, NBC Sports Ventures,Comcast Ventures, Bullpen Capital and 21st Century Fox’s Fox Sports unitthrowing collectively billions of dollars at an industry?

Even Yahoo is getting in on the act, announcing plans to host daily and weekly fantasy sports games. The announcement which came in July last year was seen by many on Wall Street as the legitimizing of an industry as an investment vehicle.[8]

The industry does have a few detractors — largely lawmakers concerned about taxation and fantasy sports eligibility to be considered under state gambling laws, i.e. is it a game of skill, or not?. Investors should pay no attention to the man behind the curtain, however.

Lawmakers Poised To Throw Their Weight Behind Fantasy Sports

The billions pouring into the industry are a major catalyst and there’s a growing sense on Wall Street that lawmakers will relent once they appreciate across the board, the tremendous tax revenue potential of fantasy sports. Lawmakers in some states have already started to show that they see the light. In Connecticut, legislation that will green-light fantasy sports, is expected to raise potentially $7M in tax revenues.

The tax incentives in larger economies like California are staggeringly huge; so huge in fact, that many larger tax jurisdictions have already begun to explore the tax benefits of legalizing fantasy sports and ultimately strip the industry of legal uncertainties. [9] [10]

DDAY Offers Biggest Untapped Upside Opportunity

Huge Fantasy Sports Growth

Huge Fantasy Sports Growth

The current state of affairs for investors is this: there is a small pool of opportunities for investors; premium companies for the most part are inaccessible (neither Draft Kings nor Fan Duel are publicly listed), and of the ones that are public, few have good long term fundamentals.

This current state of affairs is main driver for investor interest in DDAY. Not only does DDAY strong operations, the company is potentially massively undervalued. It is the only truly accessible opportunity that appears to have the genuine endorsement of investors looking to make big returns from fantasy sports.

DDAY is riding a bullish wave of interest and there is ample technical evidence to suggest that the company that once reached a high of $4.24, could be getting ready for another potentially huge rally.

Given the strong momentum behind fantasy sports, it’s conceivable that onceDDAY eclipses its historical all-time high, investors may be looking at a $10 stock. Savvy investors are clearly best served by kicking off their research in DDAY right now.

Now let’s go make that #Money

 

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