Motley Fool: Is DraftKings Insider Selling a Red Flag?

Written by:
Aaron Goldstein
Published on:

One of the hottest stocks of 2020, Motley Fool notes that DraftKings just sold 46 million shares to the public less than two months after its SPAC IPO.

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Many of these additional shares came in the form of insiders cashing out portions of their stock holdings.

So should investors view this insider selling as a red flag or just a sign of healthy demand for the stock?

Luis Sanchez of the Fool writes:

DraftKings is currently unprofitable and requires capital to invest in the growing online sports betting market. So, the rationale for raising $640 million in fresh funds is clear. However, most insiders had an opportunity to sell shares in the IPO transaction completed in April. The fact that insiders sold an additional 30 million shares (slightly less than 10% of total shares outstanding) can be interpreted as the insiders viewing the valuation as rich.

When Las Vegas was set to reopen on June 4, there was no one more optimistic and/or grateful than Derek Stevens, CEO of Circa Sports and owner of the Golden Gate Hotel.

“I told all of my employees, not only are we going to open, but we are going to open on the first minute,” Stevens said.

To make the moment even more special, Stevens first bought 1,000 airline tickets from five US airlines and culled customers from 28 US cities – giving away the flights over the course of two hours. The demand was so great, he bought 1,000 more and added five more US cities, and those were gone in the space of 20 minutes.

“It was good for Vegas, it was good for my employees and it was good for the airlines … and I certainly got to meet a whole lot of people,” Stevens said Friday.

- Aaron Goldstein, Gambling911.com

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