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Why DraftKings Stock Soared Today

By Evan Niu, CFA - Feb 2, 2021 at 1:17PM

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ARK Investment buys into the online sports betting specialist.

What happened

Shares of DraftKings (DKNG 3.37%) have soared today, up by 11% as of noon EST, after ARK Investment Management started accumulating the stock. This was the first time that ARK has invested in the sports betting specialist.

So what

While most exchange-traded funds are passively managed, ARK operates numerous actively managed funds that regularly buy and sell holdings. ARK has also taken a unique approach of disclosing its daily trading activity, and yesterday's disclosure showed that ARK Next Generation Internet (ARKW 5.67%) scooped up 620,300 shares of DraftKings, which represented approximately 0.5% weighting at the time. The reports do not specify what price the fund manager purchased the stock at, but DraftKings had a daily range of $53.14 to $55.75 yesterday.

DraftKings headquarters

Image source: DraftKings.

ARK's funds have become increasingly  popular in recent years as the ETFs have delivered strong performance. ARK Next Generation Internet currently has about $5.3 billion in net assets

Now what

Online sports betting is starting to gain mainstream acceptance as an increasing number of states have been legalizing it. DraftKings had reported a 64% increase in monthly unique players (MUPs) in the third quarter, which helped drive a 98% surge in revenue.

The company is scheduled to report fourth-quarter results on Feb. 26, and analysts are expecting DraftKings to report $232 million in revenue and a net loss per share of $0.47. Benchmark recently reiterated a buy rating on the stock while increasing its price target from $60 to $66.

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Stocks Mentioned

DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$14.72 (3.37%) $0.48
ARK ETF Trust - ARK Next Generation Internet ETF Stock Quote
ARK ETF Trust - ARK Next Generation Internet ETF
ARKW
$58.16 (5.67%) $3.12

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

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