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DraftKings prices 32M share offering at $52 per share

Yahoo Finance’s Emily McCormick joins Kristin Myers to discuss how DraftKings priced a 32 million share offering at $52 a share.

Video Transcript

KRISTIN MYERS: Let's talk Draft Kings right now. That 32 million share offering is now being priced at $52 a share. So for more on this, we're joined now by Yahoo Finance's Emily McCormick. Hey, Emily.

EMILY MCCORMICK: Hello, Kristin. We are seeing shares of Draft Kings actually selling off on news of this share offering and that pricing specifically at $52 per share for that $32 million share offering. That's for a total sale of $1.67 billion.

I do want to note that at that level, at $52 per share, that pricing of the offering does represent an 8.4% discount to Tuesday's closing level and an 18% discount to Friday's record high for the stock. So we are seeing a little bit of pressure here on shares because of that level.

Now I want to also note that half of the shares being sold are coming from the company itself. And half are from certain selling stockholders. That's allowing some of its early investors, including New England Patriots owner Robert Kraft, to cash in following the stock's more than 200% run up since Draft Kings went public via a reverse merger back in April. So, unlocking a bit of liquidity here for those early investors.

Now, to that point, we are seeing that dilution again weighing on shares here, but also want to highlight that there has been some pressure in the past couple days in the stock as well because of what we've been seeing transpire in the professional athletics industry as a whole. Want to note that players from the New England Patriots, Tennessee Titans, and Las Vegas Raiders have reportedly been testing positive for COVID-19.

Draft Kings stock does tend to react negatively to these kinds of developments in anticipation that sports schedules might be upended and remove near-term opportunities for individuals to actually place bets on Draft Kings in the near term. So all of that contributing to some of the negative sentiment around the stock that we're seeing now.

Now, want to highlight as well, just looking at the share price action, we're on track for a third straight day of declines here for Draft Kings. But the stock is still up more than 200% since that reverse merger back in April. Kristin.

KRISTIN MYERS: All right, thanks so much, Emily.