DraftKings on watch after Morgan Stanley points to high stock-based compensation level

Photo by sb-borg/iStock via Getty Images

• Morgan Stanley lowers its price target on DraftKings (NASDAQ:DKNG) to $58 from $63 to account for the company's level of stock-based compensation and higher share count.
• Analyst Thomas Allen notes that the number of outstanding DraftKings shares has increased to 430M from 350M, with only 37M primary issuance. "In addition, DKNG has recorded $483m of stock-based comp over the past year, and there is $1.1B in stock-based comp that DKNG expects to expense over the next 2.1 years," he adds.
• Looking down the road, Morgan Stanley keeps an Overweight rating on DraftKings and calls it a compelling long-term growth story aided by a unique customer acquisition advantage.
• Shares of DraftKings are down 0.65% premarket to $49.25.
• Seeking Alpha author Louis Stevens also rates DraftKings a Buy with only a fraction of the total addressable market for the company unlocked.