DraftKings Headlines List of Early 2022 Brief Covering Candidates
Posted on: December 29, 2021, 12:12h.
Last updated on: December 29, 2021, 12:12h.
DraftKings (NASDAQ:DKNG) is limping into year-finish. The on the web sportsbook operator shed practically a quarter of its value more than the past month, but there may be hope for the downtrodden stock early in the new year.
Brief covering could enhance DraftKings in early January and although long-term investors would like to see fundamentals enhance in earnest, the stock is down 41.32 % year-to-date, indicating gains — regardless of catalyst — will be welcomed. Historical precedent exists to assistance the notion that heavily shorted stocks that sagged in the previous year frequently perform well to commence the following year.
The hugely shorted stocks that have been down massive for the year performed the best in the initial week of the New Year. They gained an average of five.43 % in the week,” says Rocky White, senior quantitative strategist at Schaeffer’s Investment Analysis.
It remains to be seen if DraftKings lives up to that precedent, but there is some assistance for the beaten up stock with Goldman Sachs not too long ago noting the gaming equity gives important upside prospective more than the next year.
Shorts Obtaining Field Day with DraftKings
Gaming stocks are usually favored targets of brief sellers, but that scenario is becoming amplified with DraftKings this year.
In June, Hindendburg Research issued a scathing report in which the brief seller claims DraftKings’ SBTech unit operates in black and gray markets, has ties to organized crime and launders funds, amongst other accusations.
Earlier this month, Kynikos Associates founder Jim Chanos revealed that his firm is short the daily fantasy sports (DFS) giant, calling the organization “flawed” although noting DraftKings’ is probably to continue bleeding cash even if income quickly expands.
On these notes, it is not surprising that DraftKings is heavily. It’s 1 of 25 stocks on a Schaeffer’s list of stocks that are down at least 10 percent this year with a minimum quick interest of 10 percent. DraftKings’ quick interest is ten %, according to the investigation firm.
“These stocks meet the criteria above for very shorted, beaten down stocks that could benefit from early year quick covering. Based on the analysis above, these stocks have an enhanced possibility at outsized gains in the 1st week of the New Year,” adds White.
Some Help for DraftKings
DraftKings is the only pure play gaming name on the Schaeffer’s list, but streaming sports provider fuboTV (NYSE:FUBO), which is receiving into sports wagering, is also portion of the group. Short interest is 15 percent in that name, indicating bearish traders could be playing with fire if takeover rumors prove accurate.
As for DraftKings, it has the assistance of some prominent investors, like Cathie Wood’s ARK Investment Management.
Because Dec. 20, ARK bought far more than 250,000 shares of DraftKings, adding to its currently sizable stake in the wagering firm.