DraftKings CEO Jason Robins On Stock: ‘I’d Be Buying If I Could’

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DraftKings stock

DraftKings CEO Jason Robins would be buying more $DKNG stock if he could despite its recent slide.

The CEO responded to a tweet last week asking him to show support for the company by acquiring DraftKings shares after the recent downswing.

“I cannot buy shares due to short swing profit rules,” Robins replied. “Believe me I’d be buying if I could.”

What is the short swing profit rule?

He was asked to clarify those rules and shared a link to Investopedia.

Here’s the definition: “The short-swing profit rule requires insiders to forfeit any trading profit earned from a combined purchase and sale that occurs within a six-month period.”

The rule seemingly applies to buying and selling. In other words, since Robins has been selling shares at various prices down from $59, he would have to pay the difference if he bought at the current $13 price.

Per those rules, the insider must hand any such profits over to the company.

Timeline for Robins to buy more DraftKings stock

In light of that, Robins said he wouldn’t be able to buy shares in the open market “for months.”

Robins last sold in the open market on March 16, per Bloomberg, selling 320,000 shares for around $5.7 million.

That means he could buy again in mid-September without being affected by the short swing profit rule.

Alternative options on DKNG

In the meantime, Robins said he could still exercise options. 

“Candidly that makes more sense for me to do anyway,” the CEO said. “Options expire so it’s better to pay to exercise them versus buying shares. And it’s still a statement of confidence because I’m choosing to take a tax hit anytime I exercise.”

For example, if Robins exercised options on 100,000 shares at $4, he would have to pay tax on the $400,000 value of those shares.

Execs often sell a chunk of the new shares to pay those taxes. However, they can also pay the taxes out of pocket and keep the shares.

Not enough?

Of course that reply did not appease all investors, given the inherent value of exercising options at $4 a share when they can be sold instantly at $13.

Another respondent pointed out that each time Robins exercises options, he is diluting existing shareholders.

DraftKings has drawn criticism in the past for the amount of shares it awards to executivess.

Robins has now sold close to $200 million in $DKNG stock since the start of 2020, per Insider Monitor.

Public forum for DraftKings stock

Robins is no stranger to discussing DraftKings stock on Twitter. In November last year, he said his goal was to make DraftKings a $1 trillion company by 2032.

He also famously said in March  he was on a mission to make DraftKings sellers “regret the decision more than any other decision you’ve ever made in your life.”

However, DKNG closed Tuesday at $13 a share, despite improved EBITDA guidance at its Q1 results.