Major Investors Load Up On DraftKings Stock Amid Fourth-Quarter Slide

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DraftKings stock

A fourth-quarter slide in the DraftKings stock price led to two of its largest institutional investors increasing their positions.

Both Vanguard Group and ARK Investment Management added DraftKings stock shares from October through December according to their filed 13Gs.

Anyone bullish on $DKNG saw discounted opportunities to add to their stakes in the fourth quarter. The stock closed at $27.47 Dec. 31, down 45.7% from the $50.56 closing price on Oct. 1. That compares to a 52-week closing high of $71.98 from last March 19.

Details on increased DraftKings stock stakes

The Vanguard Group increased its stake to 26.3 million shares, or 6.5% ownership, as of Dec. 31. That is up from 24.7 million shares and 6.1% ownership as of Sept. 29.

ARK Investment Management filed its first 13G for DraftKings with 21 million shares for a 5.2% stake.

That stake already fell back below 5%, though, according to ARK’s investment tracker. ARK held 4.94% of DraftKings across its combined holdings at the end of business Wednesday.

ARK caused a DKNG price spike a year ago when it purchased 620,300 shares at $59.

Morgan Stanley: now is the time to buy DKNG

In a Jan. 26 note titled “Too Big an Opportunity to Ignore,” Thomas Allen of Morgan Stanley upgraded DraftKings to overweight with a $31 target. Allen wrote the note when the stock was $19.32. The stock closed Wednesday at $23.42.

While there are near- to medium-term profit concerns, “one should not ignore” that DraftKings has a leading market share in what will be a “very large profitable market,” Allen wrote.

The incredible launch of mobile sports betting in New York reminded Allen of just how big but concentrated the opportunity for US sports betting and iGaming is.

Reasons for upgrade

Allen’s upgrade received pushback from investors with the main focus on margins, he said in a follow-up note five days later.

He addressed the concerns with some of his expectations that led to the upgrade:

DraftKings will report its fourth-quarter earnings Feb. 18.