Shares of sports activities betting agency DraftKings fell on Tuesday after Hindenburg Analysis introduced that it had taken a brief place towards the inventory.
The inventory, which has been among the best performers on Wall Road since going public by way of a merger with a particular function acquisition car final 12 months, was down extra 7% in early buying and selling.
Within the report, Hindenburg compares DraftKings valuation to that of rival companies and questions the corporate’s promotional spend and future potential within the extremely aggressive sports activities playing panorama.
The report additionally alleges that SBTech, a European expertise firm that merged with DraftKings as a part of the SPAC deal, generates important income from questionable playing practices in abroad markets, notably in some Asian markets.
DraftKings didn’t instantly reply to a request for remark.
Hindenburg is a comparatively new brief promoting agency that has made a number of excessive profile calls towards SPACs over the previous 12 months.
The agency took out brief positions towards clean-energy car startups Nikola and Lordstown Motors, which have suffered from govt turnover and falling inventory costs since Hindenburg’s studies.
Hindenburg additionally revealed a unfavorable report towards Clover Well being in February however didn’t take a place. The inventory fell within the months following that transfer however rebounded in early June amid elevated curiosity from retail merchants on Reddit.
DraftKings and Diamond Eagle Acquisition Corp. first introduced their merger deal in December 2019 and them accomplished the mixture in April 2020. As of Monday’s shut, the inventory had jumped greater than 150% for the reason that deal was finalized and roughly 400% for the reason that deal was introduced.
Sports activities betting firms have boomed for the reason that Supreme Courtroom cleared the way in which for widespread legalization in 2018. The shares obtained an additional enhance in the course of the pandemic, as some states appeared to speed up their adoption of sports activities and on-line playing to assist shore up budgets amid the recession brought on by the pandemic.
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