DraftKings CEO Jason Robins Fires Back at Short Seller Chanos, Says Claims Are Baseless
Posted on: December 3, 2021, 09:53h.
Last updated on: December 3, 2021, 01:37h.
DraftKings CEO Jason Robins is clapping back at Kynikos Associates founder Jim Chanos, who yesterday revealed a short position in the online sportsbook operator.
On Thursday, Chanos noted he’s short richly valued emerging growth stocks that aren’t profitable, including DoorDash (NYSE:DASH) and DraftKings. Specific to the gaming company, the Kynikos boss said the business model is flawed and the operator is destined to continue losing money.
If you quadrupled DraftKings’ revenues and gross profits and every state has sports betting and then some, and it grows and you take their marketing spend — which is currently over 100% of revenues — you take it to 10% of revenues, which is their target. And you keep the overhead at today’s level — you don’t add anything. DraftKings would still be losing $200 million a quarter or $800 million a year,” Chanos said.
He adds that DraftKings is trading at 30x revenue — an assertion Robins takes issue with.
It appears Jim Chanos has forgotten how to do math. He claims we are trading at 30x revenue? Not even close Jim
— Jason Robins (@JasonDRobins) December 2, 2021
‘Some People Will Say Anything…’
Chanos made his comments in a CNBC interview on Thursday and the financial news network earlier today gave Robins a chance to address the claims.
In roughly 21 months as a standalone public company, DraftKings experienced periods of being heavily shorted, and the company doesn’t have a history of directly commenting on those scenarios, making Robins’ retorts to Chanos somewhat unique.
Some people will say anything to make a buck,” the DraftKings CEO and co-founder told CNBC. “Obviously, it’s annoying when people come and make stuff up and do that at their own service, but not much you can do about it.”
At least for today, Chanos is winning this round. Shares of DraftKings are lower by 9.33 percent on volume that’s already at the daily average. That is adding to what’s been a miserable stretch for the stock, as it shed 34.24 percent over the past month.
Robins maintains his company can achieve state-level profitability within two to three years of entering each new market. He adds that the operator is focusing on building “a great company over the long term.”
Not First Gaming CEO to Clap Back at Chanos
Robins isn’t the first chief executive officer in the gaming industry to respond to Chanos being short his company’s stock.
In September, Kynikos revealed a bearish position in Wynn Resorts (NASDAQ:WYNN), with Chanos saying the stock is overvalued even when excluding Macau concession renewal risk.
Although he didn’t go as far as Robins did, Wynn CEO Matt Maddox did note Chanos is off base in his bearish thesis, and that it was unlikely the short seller read a consultation report outlining new gaming regulations in Macau.
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