DraftKings stock is performing exceptionally well in 2020, despite all the challenges from the lack of mainstream sporting events early on in the pandemic. The stock is up 350% year-to-date, pleasing shareholders who bought the stock earlier this year. This price appreciation currently makes the stock quite expensive.
If you’re wondering why I am referring to a stock that’s priced slightly below $50 as being expensive, that would be a valid query. After all, at $50, it does not seem expensive compared to Amazon‘s stock at over $3,000, or Alphabet‘s at over $1,500.
Let’s dig a little deeper and try to uncover a few reasons why DraftKings stock is considered expensive.
What the deal?
One perspective would be to look strictly at the price per share of stock. That is the price you see listed, and that changes throughout the day as buyers and sellers trade shares back and forth. Looking at DraftKings’ stock from that point of view, $50 would not be expensive.
A different viewpoint, however, would be to look at the stock in terms of its price per dollar of sales the company generates. Through that lens, DraftKings is trading at a price to sales ratio of 38, which is quite expensive in itself and far above that of competitor Flutter Entertainment
