Is DraftKings Insider Selling a Red Flag?
DraftKings (NASDAQ: DKNG) has been one of the hottest stocks of 2020. This is somewhat surprising considering that DraftKings enables users to bet on sports, and there haven't been many sports to bet on lately.
Regardless, the stock has performed well, and the company is taking full advantage of this momentum. On June 23, DraftKings sold an additional 46 million shares in a public offering in addition to the IPO it completed in April. Many of these additional shares came in the form of insiders cashing out portions of their stock holdings. Should investors view this insider selling as a red flag or just a sign of healthy demand for the stock?
It's worth noting that DraftKings did not have a typical IPO. Instead, the company merged with an already-public special purpose acquisition company (SPAC), which effectively brought the company public. The merger with the SPAC created a market for DraftKings stock. Initially, the stock traded around $15 per share, but has rallied to as high as the mid-$40s.
Source Fool.com
