DraftKings stock shares jumped 9% today on news that Cathie Wood and her ARK fund started buying $DKNG.
According to a trading update after close on Monday, the ARK Next Generation Internet ETF (ARKW) acquired 620,300 shares of $DKNG. That chunk was worth around $34 million based on Monday’s closing price of $59.
It marked the first time any of the ARK investment funds had invested in DraftKings.
ARK buying $DKNG for the first time.. https://t.co/59ayMIntSQ
— Eric Balchunas (@EricBalchunas) February 2, 2021
Why does it matter for DraftKings stock?
As the stock jump indicated, ARK is one of the most respected funds in the US. Wood is known for her bullish early calls on assets like Tesla and Bitcoin.
The ARKW fund was up 157% in 2020. Other ARKW holdings include tech giants like Spotify and Netflix.
The $34 million investment is equivalent to around 0.5% of the ARKW portfolio.
Ark is bullish on sports betting
The investment follows an ARK report in January that called for huge growth in US online sports betting.
“Legalized online sports betting is giving companies – and the leagues themselves – an opportunity to offer exciting interactive experiences and generate new sources of revenues,” Ark Invest analyst Nicholas Grous said.
Grous called for total US sports betting revenues to hit $37 billion by 2025 – the top end of previous analyst estimates. That projection includes $18 billion from traditional sports betting, along with $13 billion from fantasy and $6 billion from esports betting.
“We believe the handle for online sports betting could scale 10x from roughly $18 billion to $180 billion,” Grous said.
DraftKings shares were last up 9% to $59. The company reports its Q4 results on February 26. Analysts expect the company to post revenues of $232 million.
DraftKings went public through a SPAC process in April 2020, becoming the first major sports betting operator to offer shares on a US-facing index. The offering included DraftKings and SBTech combining their businesses after DK agreed to purchase the tech provider in December 2019.