DraftKings Goes Public: Stocks Up 10.1% In Trading Debut
Despite the lack of competitive sports, daily fantasy sports giant, and regulated American sports betting pioneer DraftKings found a way to stay in the headlines this week. After finalizing a threeway partnership with Diamond Eagle Acquisition Corp. and SBTech, the Boston based company was able to officially go public on the US stock exchange.
Making their official debut on the Nasdaq exchange with the ticker name DKNG, the group valued at $3.3 billion saw their opening price soar up as high as 18% from the initial offering, closing at $19.21 per share, up 10.10% from the opening cost.
The ongoing halt in sporting activities has created a tricky landscape for the growing U.S. sports betting industry, and with DraftKings controlling the majority of the American DFS market, the decision to go public at a moment where the company’s main source of revenue can seem somewhat ill-timed.
The coronavirus pandemic has been costly to all involved in the sports world, canceling the NCAA Tournament, the Kentucky Derby, and leaving the fate of the NBA, NHL, and MLB seasons all up in the air.
March Madness has proven to be one of the biggest “jump in” moments for potential sports bettors, as the NCAA Tournament tip off remains one of the largest day’s in terms of new customer acquisition.
These losses have proven to be detrimental and catastrophic for many in the space, as many sports media networks have announced large layoffs and scale back efforts to counter the unprecedented loss in revenue.
The decision to debut in what has been an extremely volatile market is a gamble in itself.
Rather than wallow in misery with the rest, DraftKings’ CEO Jason Robins appears to view the situation as a chance to prove the company’s resiliency instead.
Boasting the company’s exponential growth in the esports sector and the success it has seen with customers turning to simulated matchups between virtual sports teams, Robins feels that clients’ desire to simply keep wagering shows just how strong of a userbase he has managed to secure.
In a call with investors Friday morning, Robins stated that the company was “seeing past investments in our products flourish as we continue to roll out innovative content that does not rely on major sports seasons and sporting events.”
To further support this theory, some betting shops reported up to a 300% lift in this year’s NFL Draft handle, with many fans simply content to have somewhere to focus their wagering energy.
This move shows just how confident DraftKings is in both its product and the future of the regulated sports betting market in the United States. Currently operating in eight states, their client base should only grow as regulation continues its sweep across the country.
“Eventually we do expect to start and to slowly return to a new normal,” stated Robins, “and at that time we expect that the momentum across the states for mobile sports betting will resume.”