Insiders At DraftKings Sold US$9.7m In Stock, Alluding To Potential Weakness

The fact that multiple DraftKings Inc. (NASDAQ:DKNG) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for DraftKings

DraftKings Insider Transactions Over The Last Year

The Independent Vice Chairman of the Board, Harry Sloan, made the biggest insider sale in the last 12 months. That single transaction was for US$9.5m worth of shares at a price of US$38.15 each. That means that an insider was selling shares at below the current price (US$38.34). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 31% of Harry Sloan's stake.

DraftKings insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insiders At DraftKings Have Sold Stock Recently

The last three months saw significant insider selling at DraftKings. In total, Co-Founder Jason Robins sold US$138k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does DraftKings Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. DraftKings insiders own 2.2% of the company, currently worth about US$428m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About DraftKings Insiders?

An insider hasn't bought DraftKings stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for DraftKings you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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