Cathie Wood's ARK Buys the Dip in DraftKings with $19M Purchase
The investment comes as shares of the sports betting giant face pressure from emerging prediction market competitors, testing investor conviction.
Cathie Wood's ARK Invest made a significant move this week, purchasing over $19 million worth of DraftKings (DKNG) stock as the company's shares faced a steep downturn. The investment vehicle, known for its focus on high-growth disruptive technology, acquired a total of 511,049 shares across three of its exchange-traded funds (ETFs) amidst a nearly 26% slide in the sports betting company's stock over the past month.
The bulk of the purchase, 350,315 shares, was allocated to the flagship ARK Innovation ETF (ARKK), with the remainder split between the ARK Next Generation Internet ETF (ARKW) and the ARK Fintech Innovation ETF (ARKF). This signals a strong vote of confidence in DraftKings' long-term prospects despite recent market headwinds.
The sell-off in DraftKings shares has been largely attributed to from a new wave of prediction markets. Platforms like Kalshi, which have introduced parlay-style offerings, are seen by some analysts as a potential threat to traditional sportsbooks by offering more direct and sometimes more favorable odds on a variety of events.
ARK Invest's decision to increase its position reflects a classic 'buy the dip' strategy, a move that by adding to high-conviction holdings during market downturns. Following the acquisition, DraftKings is now the 37th largest holding in the ARKK ETF. The move reinforces the view that ARK sees the current sell-off as a buying opportunity rather than a fundamental flaw in the company's business model.
While some investors remain cautious about the changing competitive landscape, ARK's substantial investment suggests a belief that DraftKings is well-positioned to navigate these challenges and maintain its leadership position in the expanding US online sports betting and gaming market. The firm's bet on DraftKings indicates a conviction that the market has overreacted to the threat from prediction platforms, creating an attractive entry point for long-term growth investors.