DraftKings May Resume Slide as Share Lockup Expires Tuesday
(Bloomberg) -- Online sports gambling company DraftKings Inc. may come under pressure Tuesday when selling restrictions from an October share sale expire, adding to recent volatility over valuation concerns.
A lockup agreement covering 64 million shares held mostly by company insiders will be eligible for sale, according to company filings. The expiration will increase the amount of shares available to trade by more than 20%, according to data compiled by Bloomberg.
The company -- and closely-followed peers including Penn National Gaming Inc., a minority owner of Barstool Sports -- soared this past year on the promise of expanded legalization in states including New York, and easier access for users where the service is already legal.
DraftKings is still up 156% since it went public through a reverse merger in April, but has tumbled more than 25% from an October record as investors have weighed its next business steps and $18 billion valuation. Shares fell 3.7% on Monday.
Bets against the company have held steady over the past month, with roughly 6.8% of shares available for trading sold short, according to financial analytics firm S3 Partners.
A DraftKings spokesperson declined a request for comment.
Despite the recent struggles, Rosenblatt Securities analyst Bernie McTernan last month named DraftKings and Penn National top picks for 2021 and called out the pair’s “attractive upside with near-term potential catalysts.”
After its last lockup expiration, DraftKings dipped just 0.4% when about 37 million shares became available in November. The shares also fell 4.6% after another lockup ended in October.
Shalom Meckenzie, a billionaire Israeli executive who merged his company with DraftKings, and Raine Capital LLC are among the top holders.
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