DraftKings Inc (NASDAQ:DKNG) shares have experienced increased volatility since Tuesday's close. The stock was moving higher at last check on Wednesday. Here's a look at what's driving the action.
What To Know: After the market close on Tuesday, Flutter Entertainment Plc (NYSE:FLUT) reported financial results for its second quarter that came in above expectations. Importantly, the company said it would not hit customers with a surcharge in high-tax U.S. states.
DraftKings shares started moving lower on the news as investors feared the announcement could encourage bettors to switch to FanDuel, impacting market share among the two leading U.S. sportsbooks. DraftKings stock fell to around the $29.50 level before bouncing back.
FanDuel and DraftKings are the biggest players in the growing U.S. market with a combined share of around 70%, per Reuters. Investors were closely watching Flutter's response to the charge DraftKings announced on Aug. 2.
Shortly after Flutter made the announcement, DraftKings tossed out its plans to charge higher fees on winnings to offset the cost of operating in states with higher gambling taxes such as New York.
"We always listen to our customers and after hearing their feedback we have decided not to move forward with the gaming tax surcharge," DraftKings said in a statement late Tuesday.
Following the developments, Needham analyst Bernie McTernan reiterated DraftKings with a Buy rating and maintained a price target of $60. Truist Securities analyst Barry Jonas also maintained DraftKings with a Buy and kept a price target of $50.
DKNG Price Action: DraftKings shares were up 5.6% at $33.20 Wednesday morning after trading below $29.50 late Tuesday, according to Benzinga Pro.
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