DraftKings IPO – Stock Jumps 14% on First Day

DraftKings

April 24, 2020 (MicroSmallCap via Comtex) — It’s a unique story at a time when there’s not much to look forward to in the world. There was no confetti, no ringing of the bell, and no photos on the stock exchange. And yet, on April 24, a daily fantasy sports company completed its first trading day on the Nasdaq. And DraftKings stock surged.

DraftKings Stock: A New Player on the Nasdaq

On April 23, DraftKings (NASDAQ:DKNG) said it received approval to begin trading on one of the world’s most popular stock exchanges. The approval came after DNKG finalized a $3.3 billion merger with special-purpose acquisition company (SPAC), Diamond Eagle. Keep in mind that SBTech, a back-end betting technology provider, is also included in the merger and that the combined company will have roughly $500 million in cash on hand.

“It’s a big milestone for us, and I think in many ways some of the things we went through, the different ups and downs and curveballs, make it that much more special,” said Jason Robins, CEO of the combined company.

With no live sports to bet on, and a global pandemic keeping most people indoors, it’s easy to think that DraftKings going public with a SPAC isn’t what investors had in mind. But life is funny, and it appears this was the best move for the Boston-based company.

Not only did DraftKings stock jump 14% in its first day of trading before closing up 10.38% at $19.35, but the company was also able to add another half a billion dollars on the balance sheet at a time when it’s not easy to raise money. (DraftKings gets to add the $400 million raised in Diamond Eagle’s offering last May).

“If this were a traditional IPO, forget ringing the bell, I don’t even think we’d be able to close the transaction,” explained Robins.

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DraftKings Stock is an Outlier

A company going public with no IPO is a standout move—especially during a global pandemic. While there are no live sports to bet on, DraftKings will be in the minds of many when the sports industry makes its return. And you know that when this happens, the drive of sports lovers will be triple what it was before the world went into lockdown.

As a result, DraftKings could very much become a household name in sports betting (just as DraftKings stock could on the market). If sports return in the fall, users will be using DraftKings to bet on everything from baseball games to golf tournaments all at the same time.

For instance, users can enter daily and weekly contests and win money based on the individual team and player performances across several sports, including the NHL, the NBA, Premier League and UEFA Champions League soccer, the XFL, and NASCAR auto racing.

There’s also speculation that some states may reconsider their hesitation about legalizing sports betting. Such reconsiderations will be based solely on the tax revenue benefits of doing so. That in itself could positively impact DraftKings stock in the future.

Takeaway

DraftKings didn’t go down the traditional IPO route, and it worked out for the better. Its established itself as an innovative company among investors, resulting in DraftKings stock surging 14% on its first day. Plus, as the world looks for something to fill the void of no sports, the excitement to eventually use DraftKings just might be that thing.

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