DraftKings Inc has confirmed the commencement of an underwritten public offering of 33 million shares of its Class A common stock, consisting of 14 million shares offered by DraftKings and 19 million shares offered by certain selling stockholders of DraftKings.
The selling stockholders intend to grant the underwriters a 30-day option to purchase up to an additional 4.95 million shares of Class A common stock. In a statement, the firm said it will not receive any proceeds from the sale of Class A common stock offered by the selling stockholders.
According to a DraftKings statement, the offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed. Explaining the rationale behind the offer, the company said it intends to use the net proceeds it receives from the offering for general corporate purposes.
While DraftKings has quickly emerged as a darling of the stock exchange, seeing its price double immediately after launch, this latest development has been met with caution by the market. After hours trading saw the firm’s price fall $2.24 to $38.33 on the news, as of 8:45pm EDT yesterday.
One of the few skeptics regarding the firm’s trading performance is Goldman Sachs. The Wall Street bank’s analyst Stephen Grambling has acknowledged DraftKings’ status as an “undisputed leader in US sports betting, but urges caution on its valuation. As reported by Forbes, he suggests that stock has limited upside, but advises investors to wait for ‘pullback’ before buying.