Cathie Wood buys shares in bookmaker DraftKings on the downturn. Should we follow her lead?

Cathie Wood has capitalized on the sharp drop in the stock price of bookmaker DraftKings. Her investment company Ark Invest bought more than half a million shares after they lost about a quarter of their value during the month. Analysts recognize that in the coming months the company will face difficulties due to high competition and difficulties in the market, but in general they remain positive and recommend to buy the securities.

Popular investor Cathie Wood's Ark Invest fund bought a total of 511,049 shares of DraftKings, SeekingAlpha writes. The bulk of the purchase came from ARK Innovation ETF's flagship fund ARK Innovation ETF, which added 350,315 DraftKings securities. Following the transaction, they became the fund's 37th-largest position with a 0.95% stake.

Additional investments were made through ARK Next Generation Internet ETF, which focuses on next-generation Internet and technology companies. It bought another 103,872 shares of DraftKings, which now ranks 31st among the fund's holdings with a 1.05% weighting.

The remainder went to ARK Fintech Innovation ETF, which bought 56,862 shares. In its portfolio the bookmaker's securities are on the 20th place with the share of 1.64%.

Over the past month, DraftKings quotes have fallen by almost 27%, and relative to the beginning of 2025 remain in the minus by more than 6%. At the pre-market on October 3, the company's shares appreciated by about 1.1%

Quotes are pressured by the industry risks faced by the company. In August, it reported profits and revenues above forecasts, but the number of unique players was below expectations. An additional pressure factor was the tightening of regulation: the Illinois authorities introduced higher taxes for licensed bookmakers, writes Barron's.

Despite the drop in quotes, analysts generally remain positive. They note that DraftKings may face difficulties in the coming months due to the difficult situation with online betting and increasing competition, but this is not a reason for investors to be pessimistic, Barron's noted.

Thus, Benchmark analyst Mike Hickey lowered the target price of the shares to $43, but kept a "buy" recommendation. His forecast implies growth of quotes by almost 23% from the closing level on October 2. Hickey remains optimistic about the long-term outlook, citing the popularity of the DraftKings app among betting enthusiasts and a growing user base. But he says the third quarter could be challenging, with the business under pressure from unfavorable sports outcomes and high marketing costs.

"We understand that sentiment is going to be extremely tight in the near term, but given that the market is pricing the papers quarter-on-quarter, we would take a wait-and-see stance and take advantage of the moment when the downturn is over," the analyst said.

Clark Lampen of BTIG lowered his target price to $45 and Curry Baker of Guggenheim lowered his target price to $55. Their forecasts assume growth of 29% and 57%, respectively. Among the risks, the experts emphasize competition, including from the startup Kalshi, which recently reported record trading volumes. At the same time, both analysts also maintained a "buy" recommendation.

"DKNG stock has been under pressure due to news about prediction markets. We believe DraftKings will soon unveil its own plan in this direction and sees such venues as an opportunity," said Baker.

Most analysts remain in favor of the idea of investing in the bookmaker: 32 out of 37 analysts tracking DraftKings' stock performance recommend buying it (Buy and Outperform ratings). Four take a neutral position with a Hold recommendation, and only one analyst recommends selling.

This article was AI-translated and verified by a human editor