DraftKings Executives Continue Stock Sales
Since December 2023, the two cofounders of DraftKings, CEO Paul Liberman and COO Jason Robins, have sold some $100 million in company shares.
That’s according to data from Insider Monitor, a website that tracks Securities and Exchange Commission filings from people trading stock in their own companies.
The leading U.S. online sports betting operator alongside FanDuel is just days away from the February 15 release of its full 2023 yearly report, which includes Q4’s data.
As recently as last week, Robins sold 450,000 shares at $43.06 each for a total of $19.377 million in cash. On the same date, February 9, Liberman sold 510,000 shares at $40 each for a total of $20 million.
That adds to the $50 million in shares they sold in December 2023.
The pair previously sold some smaller amounts of stock, around $5 million each time. But not since early 2022.
Hefty stock sales shortly before a yearly earnings announcement may raise some eyebrows.
However, it’s hardly a smoking gun signaling catastrophic news either.
Both Robins and Liberman are nominally paid $1 a year in salary to head the Massachusetts-based DraftKings, and are often compensated in company stock. Such sales are often automated.
The operator’s share price is currently $42.58, which is up 23% on last year, and 300% up on the beginning of 2022. It is, however, down 1.8% on Friday’s trading price, which is when the last two big sales happened.
Automated or not, the two DraftKings cofounders timed their sales nicely, as shares have been on a rebound since a slight dip in early January.
That dip also coincided with their sales of stock throughout December.
In November 2023, DraftKings CFO Jason Park also sold off $34 million in shares over two sales.
All transactions were filed with the SEC in accordance with the law, and although some might question the timing, there have been no allegations of criminal insider trading.
Overall, about 3% of DraftKings’ total stock is held by company management, although that will have decreased by around 0.5% with the latest sales from last week.
A 3% insider ownership rate is not a bad sight for investors, as even if the worst happened and insider information prompted executives to sell up completely, the ramifications would be limited.
Yearly Report Incoming
The operator’s Q4 2023 report, due on February 15, is hotly anticipated. The two leading operators set the benchmark for the current prevailing attitude among U.S. sportsbooks – spend big in the short term and aim for long-term profitability.
FanDuel has started to post profit-making quarters. DraftKings has not. In Q3 2023, it lost $283 million. However, it did make 57% more revenues year-on-year in that quarter.
If DraftKings reports heavier losses at the end of 2023, the whole model could come into question. Since becoming publicly traded in 2020, DraftKings has not posted a single profitable year. Yet the company share price has tripled.
Admittedly, the huge advertising spends of the major players are supposed to be scaled back in 2024, which could lead to more savings. On the other hand, it did just sign a big marketing deal with Barstool Sports.
Another significant expense was the expansion into new markets DraftKings undertook in 2023, which is expected to slow down a little in 2024.