Key Insights
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Given the large stake in the stock by institutions, DraftKings’ stock price might be vulnerable to their trading decisions
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The top 25 shareholders own 42% of the company
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Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
A look at the shareholders of DraftKings Inc. (NASDAQ:DKNG) can tell us which group is most powerful. With 68% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Institutional investors was the group most impacted after the company’s market cap fell to US$22b last week. However, the 135% one-year returns may have helped alleviate their overall losses. But they would probably be wary of future losses.
Let’s take a closer look to see what the different types of shareholders can tell us about DraftKings.
See our latest analysis for DraftKings
What Does The Institutional Ownership Tell Us About DraftKings?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that DraftKings does have institutional investors; and they hold a good portion of the company’s stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at DraftKings’ earnings history below. Of course, the future is what really matters.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don’t have a meaningful investment in DraftKings. Our data shows that The Vanguard Group, Inc. is the largest shareholder with 8.3% of shares outstanding. With 4.5% and 2.6% of the shares outstanding respectively, BlackRock, Inc. and ARK Investment Management LLC are the second and third largest shareholders. Furthermore, CEO Jason Robins is the owner of 0.7% of the company’s shares.
Our studies suggest that the top 25 shareholders collectively control less than half of the company’s shares, meaning that the company’s shares are widely disseminated and there is no dominant shareholder.
Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of DraftKings
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own some shares in DraftKings Inc.. The insiders have a meaningful stake worth US$567m. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public– including retail investors — own 30% stake in the company, and hence can’t easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example – DraftKings has 1 warning sign we think you should be aware of.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
