• Shares of DraftKings have plummeted ~30% over the past month on fears of continued pandemic interruption on sports and a lackluster secondary offering.
• DraftKings is addressing a multi-billion-dollar global opportunity in fantasy sports and online gaming and is just waiting on legislation that will unlock opportunities in large markets.
• Recent legalizations have shown that DraftKings ramps incredibly quickly to scale in brand-new markets.
• The company enjoys favorable unit economics that can position it well to becoming a global giant through its diverse collection of sports, formats, and markets.
• This idea was discussed in more depth with members of my private investing community, Daily Tech Download. Get started today »

Almost every technology stock has seen choppy trading over the past few months, but one high-flyer, in particular, has seen a harrowing correction that it hasn't yet dug itself out of: DraftKings (DKNG). The fantasy sports leader has cratered ~30% over the past month, which to me merits a serious look for the long-term investor.

DraftKings, which became one of the first high-profile unicorns to go public via a SPAC (special purpose acquisition vehicle) earlier this year, has been a company uniquely impacted by the pandemic and the months' long drought in new sports content. But, in my view, DraftKings' immense popularity for rounding out the fan experience and giving them a way of putting "skin in the game" in spectator sports positions DraftKings well for long-term dominance.

Data by YCharts

The sharp drop in DraftKings stock over the month can be explained by two factors:

• Fears of continued COVID-19 interruption on sports. College football has tentatively restarted across the country with limited audiences, but the recent diagnosis of Alabama head coach Nick Saban (one of the most storied franchises in college football) has stoked fears of continued interruption, which has already had a severe impact on DraftKings' revenue. Recently, Saban was cleared by doctors to return to the field, but fears of a wider outbreak that could stop play in the midst of a critical fall football season still weigh heavily on investor sentiment for DraftKings.
• A lackluster secondary offering. In selling 32 million shares on October, 16 million were new issuances and 16 million were insider sales, including Patriots owner Robert Kraft, who will still own ~0.5% of the company post-offering. The sale may have sparked fears that many insiders believe DraftKings may have reached a near-term peak.

The swiftness and magnitude of the recent correction, however, should offer incentive to long-term investors to re-examine the bullish thesis in this stock, which I think is quite robust. Among the many tailwinds that can drive DraftKings toward becoming a much larger company, I think the most notable are:

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