{"id":149792,"date":"2020-09-23T11:58:53","date_gmt":"2020-09-23T18:58:53","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=149792"},"modified":"2020-09-23T12:42:17","modified_gmt":"2020-09-23T19:42:17","slug":"draftkings-penn-could-be-boosted-by-short-covering","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/draftkings-penn-could-be-boosted-by-short-covering\/","title":{"rendered":"DraftKings, Penn National Chasten Bearish Traders"},"content":{"rendered":"

Broadly speaking, gaming equities are profitable for short sellers this year, owing in large part to first-quarter slumps prompted by the coronavirus pandemic. But DraftKings (NASDAQ:DKNG) and Penn National Gaming (NASDAQ:PENN) are among the names making life uncomfortable for bearish traders.<\/p>\n

\"Short
Bearish traders are getting worried about exposure to DraftKings and Penn National Gaming. (Image: Business Insider<\/em>)<\/figcaption><\/figure>\n

Short interest across gaming stocks is trending higher since March, when many of the names in the group bottomed, and currently sits at $6.53 billion, according to S3 Partners data. While bearish traders remain steadfast in their views against some traditional gaming names, sports betting mania<\/a> is forcing them to reduce exposure to DraftKings and Penn.<\/p>\n

DKNG shares shorted have been relatively stable since the beginning of July. But we\u2019ve seen short sellers taking off some of their bets since mid-August, with 3 million short shares cover, a decrease of -14%, as its stock price rallied +51%,\u201d<\/strong> said S3 Partners Managing Director Ihor Dusaniwsky in a recent note.<\/p><\/blockquote>\n

\u201cPENN shorts have been reducing their bets since late May, buying to cover 11 million shares, a -44% decrease in shares shorted, as its stock price rose +115%,” the note continued.<\/p>\n

As of Sept. 17, 7.13 percent of DraftKings shares outstanding were on loan to short-sellers, while that figure climbs to 10.77 percent for Penn. Shorting those names is akin to playing with fire<\/a> because the pair are up an average of 44 percent over the past month.<\/p>\n

September Rain<\/h2>\n

Today’s retrenchment notwithstanding, casino equities are performing well in September, erasing some of the profits notched by shorts targeting the sector.<\/p>\n

\n

Heading into the ninth month of the year, short-sellers had $1 billion in unrealized profits tied to trades on the gaming sector. Much of that stems from operators with Las Vegas Strip exposure, including Caesars Entertainment (NASDAQ:CZR), MGM Resorts International (NYSE:MGM), Las Vegas Sands (NYSE:LVS), and Wynn Resorts (NASDAQ:WYNN).<\/p>\n<\/div>\n

Short positions launched in those names earlier this year are still profitable, according to S3 data. In dollar terms, MGM is the most-shorted<\/a> gaming stock, with $1.02 billion of bearish positioning. Of the 10 most heavy names in the group, six operate integrated resorts in and around Las Vegas.<\/p>\n

\u201cThe roulette ball kept hitting double zero for Casino & Gaming short sellers in the month of September, with -$702 million of net-of-financing mark-to-market losses in just half the month,\u201d said Dusaniwsky. \u201cIf this trend continues, short sellers will be in the red for the year by the end of the month.\u201d<\/p>\n

Fuel for the Fire<\/h2>\n

Thanks to ongoing sports wagering ebullience, DraftKings and Penn enjoy plenty of catalysts<\/a> to drive those stocks higher. Short covering is another, because as those names rise, bearish traders could be compelled to buy back shares, fueling the very rallies that are burning them.<\/p>\n

The continued short-covering due to rising mark-to-market losses in DKNG and PENN will help drive their stock prices up,\u201d <\/strong>notes Dusaniwsky.<\/p><\/blockquote>\n

\u201cThe upward price moves will entice potential long shareholders to buy stock or build their positions, and creates a spiral of long buying pressure, forcing even more shorts out of the trade,” Dusanisky continued. “With almost $2 billion of short interest between the two stocks, if a sizable percentage of DKNG and PENN shorts fold, the bid-side price pressure will be significant and be a force in continuing this recent rally.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Broadly speaking, gaming equities are profitable for short sellers this year, owing in large part to first-quarter slumps prompted by the coronavirus pandemic. But DraftKings (NASDAQ:DKNG) and Penn National Gaming (NASDAQ:PENN) are among the names making life uncomfortable for bearish traders. Short interest across gaming stocks is trending higher since March, when many of the […]<\/p>\n","protected":false},"author":46,"featured_media":149795,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[62,10],"tags":[],"acf":[],"yoast_head":"\nDraftKings, Penn Could Be Boosted by Short Covering<\/title>\n<meta name=\"description\" content=\"DraftKings and Penn National Gaming are among the gaming stocks that could punish eager short sellers.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"DraftKings, Penn Could Be Boosted by Short Covering\" \/>\n<meta property=\"og:description\" content=\"DraftKings and Penn National Gaming are among the gaming stocks that could punish eager short sellers.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/draftkings-penn-could-be-boosted-by-short-covering\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2020-09-23T18:58:53+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-09-23T19:42:17+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/09\/trader2.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1100\" \/>\n\t<meta property=\"og:image:height\" content=\"550\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-penn-could-be-boosted-by-short-covering\/\",\"url\":\"https:\/\/www.casino.org\/news\/draftkings-penn-could-be-boosted-by-short-covering\/\",\"name\":\"DraftKings, Penn Could Be Boosted by Short Covering\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-penn-could-be-boosted-by-short-covering\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-penn-could-be-boosted-by-short-covering\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/09\/trader2.jpg\",\"datePublished\":\"2020-09-23T18:58:53+00:00\",\"dateModified\":\"2020-09-23T19:42:17+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"DraftKings and Penn National Gaming are among the gaming stocks that could punish eager short sellers.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-penn-could-be-boosted-by-short-covering\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/draftkings-penn-could-be-boosted-by-short-covering\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-penn-could-be-boosted-by-short-covering\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/09\/trader2.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/09\/trader2.jpg\",\"width\":1100,\"height\":550,\"caption\":\"Bearish traders are getting worried about exposure to DraftKings and Penn National Gaming. 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