Charles Krupa/AP
- Sports betting firm DraftKings soared as much as 18% in its Friday trading debut.
- The company went public through a merger with Diamond Eagle Acquisition Corp and SBTech, allowing shares to begin trading without an initial public offering or direct listing.
- DraftKings’ first day of trading arrives as the coronavirus halts nearly all sports leagues and drives wild stock market moves.
- Despite the sports shortage, the company has seen a spike in esports interest and is even offering betting on video-game simulations.
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Sports betting platform DraftKings surged as much as 18% on Friday as investors got their first chance to buy and sell shares.
The company completed its combination with SBTech and Diamond Eagle Acquisition on Thursday, allowing DraftKings’ common stock to begin trading Friday morning. The market debut didn’t involve a traditional method, as DraftKing’s merger with a special-purpose acquisition company allows it to go public without an initial public offering or direct listing.
DraftKings stock, which trades on the Nasdaq exchange under the ticker DKNG, soared immediately after Friday’s open before paring gains later in the day. Shares traded at $19 as of 12:25 p.m. ET, up about 8.4%.
The company’s first day of trading arrived at a pivotal moment for the global sports industry. The coronavirus pandemic has frozen nearly all leagues and events, barring some esports tournaments and a charity golf match between Tiger Woods, Phil Mickelson, Tom Brady, and Peyton Manning. The firm isn’t concerned about the lockdown, CEO Jason Robins told CNN Business, as demand will rebound once the health crisis is over.
“We have a good story that resonates with investors for the long term,” Robins said.
The sports shortage hasn’t stopped DraftKings from offering new gambling opportunities. Entries on the company’s fantasy esports contests soared 50-fold in March as virus shutdowns began. DraftKings is also allowing users to bet on simulated matches taking place in popular games like Madden NFL, according to CNN Business.
The debut’s timing also faces a broader threat due to the investing landscape. DraftKings is one of the few companies going public amid heightened market volatility. Equity prices have rebounded from their late-March lows, yet remain well below their pre-virus highs as investors brace for a prolonged recession.
Though investors have mostly shrugged off daily coronavirus data, oil’s plunge into negative prices on Monday roiled stocks through the start of the week and added a new element to an already dire economic situation.
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