(Reuters) – Short-seller Hindenburg Research said on Tuesday it has taken a short position on Draftkings Inc, sending the online gaming firm’s shares down more than 7% in early trading.
“We think Draftkings has systematically skirted the law and taken elaborate steps to obfuscate its black market operations from the investing public,” Hindenburg said. (https://bit.ly/3gqpoxx)
The sports betting operator, the latest in Hindenburg’s recent string of attacks against special purpose acquisition companies (SPACs), was not immediately available to comment.
Draftkings allows users to enter daily and weekly fantasy sports-related contests, and is the official betting operator of golf tour organizer PGA Tour and Ultimate Fighting Championship (UFC).
Its operations are exposed to varying regulations on online gambling across regions. In the United States, it has live betting operations in states including Colorado, Illinois and Indiana.
EV maker Lordstown Motors and Nikola Corp, which both went public via SPAC acquisitions, have also been targeted by Hindenburg. Short-sellers sell borrowed shares in the hope of buying them back at a cheaper price and pocketing the difference.
Shares of Draftkings have more than doubled in value since it went public in a reverse merger in April last year.
The boom in the blank-check company market over the last year is seen to be deflating as SPACs face a regulatory crackdown from the U.S. Securities and Exchange Commission.
(Reporting by Nilanjana Basu and Chavi Mehta in Bengaluru; Editing by Ramakrishnan M. and Devika Syamnath)
