ESPN Effect: Why DraftKings Shares Spiked Over 8% After-Hours Today

DraftKings Inc (NASDAQ: DKNG) shares soared nearly 8.5% in the after-hours trading on the buzz surrounding a large partnership with Walt Disney Co.’s (NYSE: DIS) ESPN.

What Happened: The agreement will allow ESPN to build on the increasingly popular sports-betting segment, reported Bloomberg.

The details of the deal, including its structure, couldn’t be ascertained by Bloomberg, with ESPN declining to comment on the publication.

DraftKings said it has a "great, long-standing relationship with ESPN,” but refused to comment on talks with other companies, according to Bloomberg.

See Also: How To Buy Disney (DIS) stock

Why It Matters: Disney was said to be targeting sports betting to revitalize ESPN, which was grappling with a shrinkage of subscribers.

Disney CEO Bob Chapek said at the time that the push into betting was “driven by the consumer, particularly the younger consumer that will replenish the sports fans over time." 

It was reported earlier that an ESPN sports-betting app was already in the works, with Chapek saying “we’re working very hard on that.”

Recently, ESPN Chair Jimmy Pitaro said that the sports broadcaster wants to “eliminate friction” for bettors, according to Bloomberg.

Disney has been on the lookout for a major sports betting partner for ESPN for more than a year. It is seeking as much as $3 billion for what Bloomberg called an “extended deal.”

Price Action: On Thursday, DraftKings shares shot up 8.5% to $17.41 in extended trading after closing 3.95% lower at $16.04. On the same day, Disney shares fell 0.7% in extended trading to $100.10 after closing 0.4% lower in regular hours, according to data from Benzinga Pro. 

Read Next: Apple Co-Founder Takes Swipe At Mark Zuckerberg's Meta Over Cost Cuts, Citing His Personal 'Sacrifice'