DraftKings shares surge as company goes public despite sports shutdown

DraftKings threw a Hail Mary of an IPO and scored a touchdown.

The fantasy sports firm’s stock price surged on its first day of trading Friday even though the coronavirus pandemic has forced sports leagues to take an extended time out.

DraftKings shares spiked as much as 18.3 percent a day after the company closed a $3.3 billion merger deal that allowed it to trade on the Nasdaq Global Select Market. The company’s shares, listed under the ticker symbol “DKNG,” were up 7.1 percent at $18.78 as of 2:29 p.m.

DraftKings’s business usually revolves around daily fantasy sports contests and online betting on professional sports games that have been halted amid the virus crisis. But the Boston-based company has gotten creative with the world’s major leagues on hold.

DraftKings has set up free pools and contests tied to popular TV shows including the viral Netflix series “Tiger King” along with reality programs “Survivor” and “Top Chef,” CEO Jason Robins said. Its customers can also engage with “e-sports” events like simulated NASCAR races and the online video game “League of Legends,” according to Robins.

“We are seeing past investments in our products flourish as we continue to roll out innovative content that does not rely on major sports seasons and sporting events,” Robins said on a Friday morning call for investors.

Rather than go through a traditional initial public offering, DraftKings went public by merging with gaming technology firm SBTech and Diamond Eagle Acquisition Corp., a blank-check company founded by former MGM chairman Harry E. Sloan that was already publicly traded. DraftKings said the deal made it the only vertically integrated sports-betting operator based in the US.

The company started trading amid a historic downturn in the stock market, which has been rattled by the coronavirus pandemic’s impact on the global economy. But technology stocks have held up better than others — the tech-heavy Nasdaq was down just 5 percent year-to-date through Thursday, compared to a 13.4 percent drop in the S&P 500.

DraftKings is partly banking its future on its sports-betting business, which includes a sportsbook that’s currently active in New York, New Jersey and six other states. The company aims to expand the business into more states once the virus crisis subsides and lawmakers have the bandwidth to take up sports-betting legislation, according to Robins.

“Eventually we do expect to start and to slowly return to a new normal, and at that time we expect that the momentum across the states for mobile sports betting will resume,” Robins said.

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