DraftKings Emerges as One of the Most Successful Recently Listed SPAC Shares
DraftKings' (NASDAQ: DKNG) journey as a public company began in late 2019, when it announced a merger with a special purpose acquisition company (SPAC). Since then, the online sportsbook giant has become one of the top performers among all companies that went public in this manner.
Despite the recent history of poor performance among companies that have entered the public markets through SPAC mergers, DraftKings has managed to buck the trend. Since its own SPAC merger, the stock has grown a staggering 285%, making it one of the best-performing gaming stocks.
However, not all SPAC-born stocks have performed this well. According to FinChat, 400+ companies have gone public via this route over the past four years, with the average return being a dismal -67%. Out of these, DraftKings stands out as the second-best performer after Vertiv Holdings, a data center provider that returned 611% after its own merger.
DraftKings: The Exception, Not the Rule
DraftKings' stock encountered a major setback between March 2021 and August 2022, as the share price plummeted from around $72 to $10.50. However, since then, the price has nearly quadrupled, touching $50 recently. DraftKings is Wall Street's favorite gaming stock and is part of an iGaming/online sports betting duopoly alongside FanDuel, making it a dominant player in the market.
Unlike other SPAC-born companies in the gaming sector, DraftKings has managed to avoid the redemptions that often plague such deals. The decline in performance of several other gaming companies that went public in 2021 can be attributed to the significant redemptions made by SPAC insiders after the mergers.
Some SPAC-Gaming Stocks Making a Comeback
While DraftKings continues to lead the pack, some other gaming stocks are making a comeback after struggling in the years following their own SPAC mergers. Rush Street Interactive (NYSE: RSI), which went public in December 2020, needs to more than double to reach its 2021 highs. However, it has already more than doubled its price year-to-date and has nearly tripled over the past year.
Codere Online Luxembourg (NASDAQ: CDRO), also a product of a SPAC deal, has had a remarkable year, with its stock surging 139.63% year-to-date.
Other gaming companies that emerged from SPAC transactions still have a long way to go. Super Group Holdings (NYSE: SGHC), a small online sportsbook operator, would need more than triple its current price to reclaim its all-time highs, and social casino developer Playstudios (NYSE: MYPS) would need to more than quadruple to return to the 2021 record high set by the stock. Playstudios, which went public through a merger with a SPAC partially controlled by several gaming industry executives, including former MGM Resorts International (NYSE: MGM) CEO Jim Murren, has potentially the most ground to cover.
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