DraftKings CEO Responds To Short Seller: ‘His Math Makes No Sense’

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Jason Robins has hit back at DraftKings short-seller Jim Chanos, saying the legendary investor’s math “doesn’t add up.”

Chanos revealed on CNBC Thursday he had built a short position in DraftKings based on its current P&L numbers.

“DraftKings has a valuation right now of 30 times runway revenue,” he told CNBC. “You can believe in sports betting … but this business model is flawed.”

He suggested DraftKings could quadruple its revenues without increasing costs and still lose $200 million a quarter.

“That is completely and totally insane,” Chanos added.

Who is Jim Chanos?

Chanos first gained attention as an investor for shorting Enron before its collapse in 2001. He is currently president and founder of Kynikos Associates, a New York investment firm focused on short selling

Chanos also went after DraftKings on social media this week, sharing Robins’ comments on sharp bettors, first reported by LSR.

Chanos added:

“If the “sharps” are already less than 10% of his business, then from whom is he ultimately going to profit from, given their ridiculous cost structure? The suckers seem expensive to acquire, too. And may need “replacing”, ultimately! $DKNG”.

Robins strikes back

However, Robins had his own turn on CNBC Friday morning, where he claimed Chanos’ math “made no sense:”

We are not trading near 30x revenue. It is less than half of that. I’m not sure what he’s doing,” Robins said.

“He is a smart guy. I’m sure he knows better. We all have to get up in the morning and look in the mirror. Some people are looking to make a buck. We are not focused on people selling short. We are focused on people who are true believers.”

Robins added: “Obviously it’s annoying when people make stuff up for their own service but there’s not much you can do about it.”

Following Robins’ appearance, Chanos doubled down on his calculations. 

Steady decline for DraftKings stock

Robins also took time on CNBC to clarify his comments earlier this week that: “People who are doing this for profit are not the players we want.”

Robins said he meant DraftKings did not want professional bettors, “which is what any book would say.”

The dispute comes with DraftKings stock down around 56% from its highs earlier this year. $DKNG lost another 5% on Friday amid a broader market sell-off, falling to $29.50 on Nasdaq at time of writing.

Robins has been active this week on traditional and social media, as he tries to reassure shareholders he is in it for the long run.

The CEO also tweeted that short selling should be illegal, echoing Elon Musk.