Stocks Fluctuate, U.S. Bond Yields Touch 1-Year High

Dow: +0.20% | Nasdaq: -0.34% | S&P: -0.06%

Catch Up Quick

• A JPMorgan market positioning gauge revealed global investors now have less fear of taking market risks than at the time of the dot-com bubble burst

• Year to date (“YTD”), > 15% of debt raised in the U.S. high-yield market has a rating of CCC or below (the lowest given rating) → highest share since 2007

• NAACP sued Trump for his role in inciting the Capitol riot

• Daily confirmed coronavirus cases in the U.S. fell below 100K on Friday for the first time in months

• Jack Dorsey and Jay-Z invested 500 BTC (~$25M) into an endowment to fund crypto development in Africa and India

• Biden increased the # of coronavirus vaccines shipped weekly while extending homeowner forbearance & foreclosure relief

• Extreme winter weather has left 4.1M in TX without power (PowerOutage.us)

• The FTC is probing Nvidia' ($NVDA) acquisition of Arm from SoftBank

• Cloud monitoring platform Datadog ($DDOG) announced its acquisition of Sqreen, a SaaS application security platform

• Walmart administered its first coronavirus vaccines this past Friday

• Elon Musk invited Russian President Vladimir Putin to “chat” on Clubhouse

• Jaguar, the British luxury car brand, said it's going fully electric by 2025

Thought of the Day

• Recent data from the New York State Gaming Commission reported that NY sports betting revenue rose ~76% year-over-year "(“YoY”) in January 2021

• This reflects a broader trend within the sports betting industry since 2018, when the Supreme Court federally delegated the option of legalization to governments at the state level

• Subsequently, there have been 18 states + Washington, D.C. that have legalized sports betting, 4 states where it is legal but not operational, and 7 states where legislation is currently active (but not passed)

• While legalization is a significant positive catalyst, the growth of the internet, number of mobile devices, and increased ease of user interfaces means that even in light of a global pandemic, bettors can easily access odds and wager on live events

• Even in 2019 (pre-pandemic), 82% of New Jersey’s sports betting took place over the internet, suggesting that future vanguards won’t be decided by who can build the grandest, or most expansive network of brick-and-mortar casinos, but by who can garner the most downloads and retain the most monthly active users (“MAUs”) via a clean digital platform offering

• Especially given the addictive tendencies of gambling, easy to use online interfaces bode well for increasing user stickiness (and thus revenue) in the long run

• Morgan Stanley’s conservative estimates give the sports betting industry a total addressable market (“TAM”) of $7B by 2025

• With increasingly complex regulatory hurdles limiting the amount of new entrants, the small number of existing publicly traded books not only boast a strong first-mover advantage, but also a sizeable economic moat

The Bottom Lines

• One notable player within the space that we’ve previously discussed is DraftKings ($DKNG) → up ~46% since our excerpt

• The platform now boasts exclusive partnerships with the MLB, NHL, UFC, NFL (recently expanded to Canada), Turner Sports & Bleacher Report, and most recently ESPN → largest US sports TV network

• Additionally, its strong presence within the fantasy realm has increased sports engagement from younger generations, which facilitates the development of a long term pipeline of future users

• As always, for investors looking to minimize risk while ~mirroring industry growth, sports betting ETF ($BETZ) also offers an advantageous way to passively capture future upside while remaining diversified!

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