“Just do Something!” - DraftKings

We examine how using DynaLogic's signals on DKNG could have improved your total return from 66% to 176% while providing greater diversification and less risk

For the last almost 12 months, we have seen our subscriber base grow into the thousands and have more recently seen our paid subscriber base grow consistently as we continue to publish relevant information in a volatile market environment. We have repeatedly focused on the “Risk Off” of using the Sell signals to take some “Chips of the table” as underlying securities move up in price.  Today, we want to highlight a case study on DraftKings.

DraftKings (DKNG) is an American daily fantasy sports contest and sports betting company. The company allows users to enter daily and weekly fantasy sports-related contests and win money based on individual player performances in five major American sports (the MLB, the NHL, the NFL, the NBA, and the PGA) as well as soccer, auto racing, tennis, and World Wrestling Entertainment.

In late 2019, DraftKings agreed to a merger with Diamond Eagle Acquisition, a special purpose acquisition company and the stock closed that day at $9.80.  On April 24, 2020, DKNG started trading on the NASDAQ and closed at $19.35. DKNG reached a closing high on March 19, 2021, at $71.98 up more than 6-fold in value.  DKNG closed on March 15, 2023, at $17.99.

Let’s examine the DKNG journey through the DynaLogic overlay and look at the cash raised from the sell signals along the way which could be used to diversify the portfolio. 

Below is a chart where the green lines represent the sell signals.

The scenarios below assume that you invested $25,000 in DKNG at the IPO and then either held those shares (scenario 1), sold according to our sell signals and held cash (scenario 2), and sold shares and then reinvested the capital into SPY (scenario 3).

Scenario 1 - Buy and Hold DKNG

Scenario 2 - Sell Shares with DynaLogic and Hold Cash

*This doesn’t incorporate the value of putting that cash into a high-yield savings account, which are paying as high as 4.05% APY and would further improve this scenario’s outcome.

Scenario 3 - Sell Shares with DynaLogic and Use After Tax Proceeds to Buy S&P 500 ETF (SPY)

In scenario 1, Buy and Hold, you still hold 100% DKNG.  Total Return 66%

In Scenario 2, use DynaLogic sell signals to raise $49,466 in net proceeds (almost 2 times the initial investment and still own $12,738 in DKNG. Total return 148%.

Scenario 3, use DynaLogic sell signals to raise $49,466 in net proceeds (almost 2 times the initial investment, use proceeds to buy 149 shares of SPY, and still own $12,738 in DKNG.  Total return 176%

We have mentioned repeatedly, concentration creates wealth and diversification preserves wealth. In Scenario 2 & 3 the ownership in DKNG has been reduced dramatically, and in Scenario 3, cash has been redeployed into the SPY providing further diversification (in other words, “Risk Off”)  though in this case, more wealth also.  

Ready to join as a paid subscriber and profit from scenarios just like this? We promise the expected return on investment is better than your March Madness bracket!

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