DraftKings Incorporated suffers bourse valuation setback

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The value of individual shares in American online sportsbook and daily fantasy sports operator DraftKings Incorporated reportedly fell by 4.2% yesterday following news that a key specialist had recommended taking up a short position on its stock.

According to a Tuesday report from American television broadcaster CNBC, the advice from Hindenburg Research LLC came after the investments research enterprise published a report in which it questioned the sportsbetting giant’s promotional spend and future potential. The analyst purportedly also threw doubt on Nasdaq-listed DraftKings Incorporated’s valuation when compared to rivals such as the soon-to-go-public FanDual Group before alleging that the company may have had ties to questionable gambling practices.

Rapid rise:

Boston-headquartered DaftKings Incorporated quickly took advantage of the United States Supreme Court’s 2018 revocation of the Professional and Amateur Sports Protections Act (PASPA) and is currently licensed to offer its mobile-friendly remote sportsbetting services in seven states including the important markets of New Jersey, Indiana and New York. The firm reportedly saw the individual value of its shares hit an all-time high of $71.98 in March following the completion of its merger with prominent iGaming technologies innovator SBTech Malta Limited.

Prominent procurement:

CNBC reported that this amalgamation, which was facilitated by special purpose acquisition firm Diamond Eagle Acquisition Corporation, took DraftKings Incorporated public and made its founder, Israeli businessman Shalom Meckenzie, an instant billionaire. However, yesterday’s recommendation purportedly put a serious crimp in this success as it pushed the operator’s stocks to close down at $48.51.

Critical counter:

As part of its recommendation and Hindenburg Research LLC reportedly claimed that DraftKings Incorporated may have benefitted from revenues SBTech Malta Limited potentially made by offering its services to questionable operators in overseas markets such as those spread across eastern Asia. But the American operator immediately rebuffed this damaging allegation by purportedly asserting that it is ‘comfortable’ with its past business history and that the damning report had been written by an investor ‘with an incentive to drive down the share price’.

Reportedly read a statement from DraftKings Incorporated…

“Our business combination with SBTech Malta Limited was completed in 2020. We conducted a thorough review of its business practices and we were comfortable with the findings. We do not comment on speculation or allegations made by former employees of SBTech Malta Limited.”

Antagonistic approach:

CNBC reported that Hindenburg Research LLC is a relatively new short-selling firm that has made several high-profile calls against special purpose acquisition companies over the course of the past year. It purportedly took stances against clean-energy vehicle start-ups Nikola Power Corporation and Lordstown Motors Corporation in advance of publishing negative commentary on healthcare insurance provider Clover Health Investments Corporation without taking an official position.











new yorknew jerseyigamingindiananasdaqunited states supreme courtpaspaprofessional and amateur sports protection actdraftkings incorporatedsbtech malta limiteddiamond eagle acquisition corporationshalom meckenziehindenburg research llcfandual group

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