ARK Investment Management Pares DraftKings Stake

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Posted on: August 8, 2022, 11:24 a.m.

Last update on: August 9, 2022, 10:12 a.m.

Cathie Wood’s ARK Investment Management sounded the register on a portion of its DraftKings Inc (NASDAQ:DKNG) stake on Monday.

ARK DraftKings
Cathie Wood, founder of ARK Investment Management. His company reduced its DraftKings position today. (Image: Getty Images)

After spending the first half of 2022 faltering, the stock has risen 44.66% over the past month, presenting investors with a decent opportunity to take profits or cut losses from the online sports betting operator . Since the beginning of this year, the name of the game has lost a third of its value.

Today, ARK sold 852,851 shares of DraftKings on the ARK Innovation ETF (NYSEARCA:ARKK) – the issuer’s flagship exchange-traded fund. The $7.93 billion ARKK still owns 16.32 million shares of the Daily Fantasy Sports (DFS) company, valued at $293.12 million, according to data from the issuer. Stock is ARKK’s 15e-the largest position with a weighting of 2.91% at the close of US markets today.

DraftKings remains a top 10 holding in the $1.13 billion ARK Next Generation Internet ETF (NYSEARCA:ARKW), with a 4.65% weighting in that fund. The sports betting operator is also in the top 10 constituents of the ARK Fintech Innovation ETF (NYSERACA:ARKF) with an allocation of 4.42%.

ARK’s first recent DraftKings sale

Wood’s asset management firm has long backed DraftKings, adding the stock to the aforementioned ETFs last year and even buying amid steep declines.

Still, Wood remains fearless. She has a long history of patience with growth stocks – her time frame is often five years or more – and buying dips in shaky names in which she has high conviction. This could be exactly what is happening with DraftKings.

ARK’s partial sale of its stake in DraftKings comes as the stock has risen 30.62% over the past week. It also comes just days after the company released a buoyant 2022 earnings outlook, while telling investors it expects a significantly lower annual profit before interest, tax, depreciation and amortization (EBITDA) loss. to that previously planned.

The online sports betting operator now forecasts revenue of $2.08 billion to $2.18 billion for 2022, up from $2.05 billion to $2.17 billion. This implies year-over-year revenue growth of 60% to 68%. Analysts had expected $2.1 billion. Boston-based DraftKings sees an EBITDA loss of $765-835 million in 2022, better than the previously forecast loss of $810-910 million.

ARK Ranks Among DraftKings Top Investors

At the end of the second quarter, Wood’s ETF issuer held 25.27 million shares of DraftKings, making it the fourth largest institutional owner of the shares.

ARK doesn’t shy away from game stocks. For example, the aforementioned ARK Next Generation Internet ETF owns 5.19 million shares of sports betting data provider Genius Sports (NYSE:GENI) and nearly 467,000 shares of Endeavor Group (NYSE:EDR).

Endeavour, the parent company of the Ultimate Fighting Championship (UFC), has acquired sports betting platform OpenBet from Light & Wonder. OpenBet customers include DraftKings, FanDuel, William Hill and WynnBet.

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