DraftKings (NASDAQ:DKNG) stock has been on quite the roll of late.

The company recently posted its stellar second-quarter results, plus a slew of positive business updates make DKNG stock a fantastic bet.

Moreover, the stock is trading at less than 25% of its 54-week highs. Hence, it signals an excellent opportunity to scoop up the stock at a hefty discount.

DKNG stock is up a healthy 24% since the beginning of the year.  However, it’s way off from March highs, where it’s shot up to $74.30. It trades today at around $60.

It’s clear that the tide is turning toward legalization, and DraftKings has capitalized on that trend in an emphatic fashion.

Monetization and ramp-up in operations have happened quickly in states which enacted sports betting laws.

Moreover, the company is moving into other lucrative business areas to transition into an entertainment conglomerate. Average analyst estimates suggest that the stock is undervalued by at least 22%. Hence, there’s plenty of upside with DKNG stock.

Another Strong Quarter

DraftKings rounded off another solid quarter, marked by a healthy improvement across all its core metrics.

Its revenues rose 320% on a year-over-year basis to $298 million, beating consensus estimates by roughly $51 million. Moreover, its loss per share of 76 cents narrowed from 87 cents from the previous quarter.

The company’s monthly unique players increased by almost four times on a year-over-year basis to 1.12 million.

Activity levels have risen considerably since the sports calendar opened up again after the pandemic.

The average revenue per paid user soared 26% from the prior-year period to $80, which shows that players are placing more bets. Additionally, unique monthly payers for its B2C segment improved 281% in comparison to the second quarter of 2020.

DraftKings has succeeded in gaining user engagement across several sports. However, its betting relationship with key sports leagues such as Major League Baseball (MLB) remains its biggest bet.

On July 9, it announced an extension to its sports betting relationship with MLB.

Furthermore, the momentum from the second quarter has carried over to the third quarter. It has raised its revenue guidance from $1.05 billion- to $1.15 billion to a range of $1.21 billion- to $1.29 billion.

Expansion Plans

DraftKings has big plans of diversifying its business by moving into the fast-growing sports NFT marketplace, expanding its iGaming portfolio, and becoming a media service.

In August, DraftKings announced its intention to acquire an iGaming company called Golden Nugget Online (NASDAQ:GNOG) for $1.56 billion in an all-stock deal.

The impetus behind the deal was to increase DraftKings exposure in New Jersey and Michigan. Golden Nugget has a massive user base from those states and has a total of 5.5 million paying users in its membership program.

DraftKings expects to generate over $300 million in EBITDA synergies from the deal.

Another lucrative area where DraftKings is planning to make inroads is the NFT market. Sports NFTs have been a lot of traction lately and have been one of the most actively traded NFT categories in the past year.

With its experience, DraftKings has a chance to cement its position in the industry. Over $500 million in sports NFT transactions have taken place since last July, representing a massive market opportunity for DraftKings.

Bottom Line on DKNG Stock

DraftKings has been on fire after another impressive quarter where it showcased its ability to monetize its growing user base.

It continues to grow at an aggressive pace and will finish off the year strong with record earnings.

Moreover, it is moving into adjacent business areas to diversify its income streams. On top of that, it trades at a highly attractive valuation with healthy upside potential.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.