Please ensure Javascript is enabled for purposes of website accessibility

DraftKings Sets Its New Stock Offering at $1.7 Billion

By Demitri Kalogeropoulos – Oct 7, 2020 at 9:04AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The cash will go toward supporting management's growth projects.

DraftKings (DKNG 5.11%) is getting a much-needed capital infusion. On Wednesday, the online sports betting specialist revealed the pricing of its latest stock offering as it raises money to support the young business.

DraftKings' offering prices 32 million shares at $52 each, which works out to just under $1.7 billion of total capital. A significant portion of that haul will go to other stockholders, though, who are capitalizing on the stock's sharp 2020 rally.

The company stands to collect proceeds from about half of the offering -- minus fees. Executives said the net proceeds will go toward general corporate purposes, which could mean anything from payrolls to acquisitions.

A man bets on a sporting event using his smartphone.

Image source: Getty Images.

The move comes at a tricky time for the business, which only went public in April. DraftKings is still working to build a profitable online betting platform in the wake of COVID-19 disruptions.

Management said as recently as mid-August that it predicts negative operating cash flow "for the foreseeable future," due to its focus on establishing the business. This week's capital raise, while diluting to current stockholders, should help offset those losses so that DraftKings can make bolder investments into growth initiatives.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$14.61 (5.11%) $0.71

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.