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Why DraftKings Stock Plunged Today

TheMotleyFool

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Shares of DraftKings (NASDAQ: DKNG) fell 9.4% on Friday after noted short-seller Jim Chanos said he was betting against the sports betting company.

Chanos believes the stock is drastically overvalued given the company's strategy of spending heavily on marketing to fuel its growth.

"If you quadrupled DraftKings' revenue and gross profit ... and take their marketing spending, which is currently over 100% of revenue, to 10% of revenue, which is their target, and you keep overhead at today's level ... DraftKings would still be losing $200 million a quarter," Chanos said. "That is completely and totally insane."

Source Fool.com

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