DraftKings Stock Is Under Pressure. Insiders See a Buying Opportunity.

Online sportsbook DraftKings reported weaker-than-expected third-quarter earnings on Nov. 6. (Angus Mordant/Bloomberg)

Key Points

• Two DraftKings directors, Harry Sloan and Gregory Wendt, collectively purchased 35,000 shares for over $1 million on November 11.
• DraftKings stock has declined more than 15% this year and 23% over the past 12 months, trailing the S&P 500’s 16% gain.
• The company faces stiff competition from FanDuel and prediction markets Kalshi and Polymarket, impacting its stock performance.

DraftKings stock has trailed behind the broader market this year amid stiff competition in the online sports betting market. Two insiders saw a buying opportunity.

Two directors made the only open-market purchases by company insiders of the year on Nov. 11. Former Metro-Goldwyn Meyer CEO Harry Sloan, who has been on the board of DraftKings since April 2020, bought 25,000 shares for roughly $30.30 each, or $757,500 in total, according to a Form 4 filed with the Securities and Exchange Commission on Wednesday.

The transaction brought the number of shares he held directly to 249,712, valued at some $7.87 million based on Wednesday’s closing price of $31.51.

Sloan wasn’t the only one to snap up shares. The same day, newly appointed director Gregory Wendt made his first purchase since joining the board in late October. Wendt bought 10,000 shares for $30.27 each, or a total of $302,700, according to a separate securities filing.

DraftKings didn’t immediately respond to a request for comment regarding the transactions.

Shares peaked during in 2021 amid a significant increase in the number of states legalizing online sports betting. However, the stock declined through 2022 as investors began to question the company’s fundamentals, namely profitability. DraftKings achieved its first year of positive adjusted earnings before interest tax and depreciations, or adjusted Ebitda, as recently as 2024.

While the stock rebounded some and was trading above $40 in early April, it has slid since then, and was hovering near its 52-week low of $26.23 on Thursday. Weak earnings on Nov. 6 contributed to the recent losses, but there’s more to the story.

DraftKings has grappled with competition from fellow online sportsbook FanDuel, with the two companies essentially holding a duopoly over the market. Prediction markets Kalshi and Polymarket have also pressured the stock this year, as event contract products from both companies bring sports betting to states where DraftKings can’t operate.

Shares have slumped more than 15% this year and 23% over the past 12 months. The benchmark S&P 500 , by comparison, has gained 16%.

Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com