ARK Invest, the fund run by star stock picker Cathie Wood, swooped at an opportunity to ‘buy the dip’ in shares of DraftKings Inc (NASDAQ:DKNG) after the fantasy sports firm saw its stock price knocked by a broadside from short seller Hindenburg Research.
The firm found itself under pressure after Hindenburg released a report on Tuesday stating that it had taken a short position against the company after an investigation into the source of revenues of its subsidiary SBTech. The company has denied the content within the report.
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The report also went on to say that several industry experts and competitors interviewed by Hindenburg had queried some aspects of DraftKing's business model and the loyalty of its customers.
Hindenburg’s broadside sent DraftKings’ shares sliding, with the company ending Tuesday’s session 4.2% lower at US$48.51.
However, ARK pounced at the chance to snap up stock in the firm at a discount price, buying 870,299 shares on Tuesday during DraftKing’s slump.
On Wednesday, it seemed as if ARK’s bet had provided a confidence boost for the shares, which were up 0.7% at US$48.85 in pre-market trading.