DraftKings (NASDAQ:DKNG) is limping into year-end. The online sportsbook manipulator throw off nearly a billet of its time value over the past month. But thither might follow hope for the downtrodden buy in betimes inward the new year.

Short cover could encouragement DraftKings inwards early January, and patch long-term investors would ilk to see to it basics improve inward earnest, the caudex is downwards 41.32 percent year-to-date, indicating gains — disregardless of catalyst — will follow welcomed. Historical precedent exists to reenforcement the notion that intemperately shorted stocks that sagged in the previous twelvemonth often execute substantially to take up the next year.

The extremely shorted stocks that were push down big for the yr performed the topper inward the first hebdomad of the New Year. They gained an norm of 5.43 percent in the week,” says Rocky White, senior quantitative strategian at Schaeffer’s Investment Research.

It remains to live seen if DraftKings lives upwardly to that precedent. But in that respect is some reenforcement for the beaten-up stock, with Emma Goldman Sachs of late noting the gaming equity offers significant upside potency over the next year.

Shorts Having Field Day with DraftKings

Gaming stocks are often favored targets of unforesightful sellers. But that scenario is being amplified with DraftKings this year.

In June, Hindendburg Research issued a vituperative report inwards which the shortsighted vender claims DraftKings’ SBTech unit operates inward blackened and Gy markets, has ties to organized crime, and launders money, among other accusations.

Earlier this month, Kynikos Associates founder Jim Chanos revealed that his fast(a) is unawares the daily fantasy sports (DFS) giant, calling the business organisation “flawed,” spell noting DraftKings’ is likely to proceed haemorrhage hard cash even if revenue rapidly expands.

On those notes, it’s non surprising that DraftKings is to a great extent down. It’s ane of 25 stocks on a Schaeffer’s listing of stocks that are down feather at least 10 percent this year, with a minimum shortsighted interest of 10 percent. DraftKings’ shortsighted interest group is 10 percent, according to the research firm.

“These stocks sports meeting the criteria to a higher place for highly shorted, beaten-down stocks that could do good from ahead of time twelvemonth shortsighted covering. Based on the analytic thinking above, these stocks feature an increased chance at outsized gains inwards the number 1 week of the New Year,” adds White.

Some Support for DraftKings

DraftKings is the only when virtuous frolic gaming name on the Schaeffer’s list. But streaming sports provider fuboTV (NYSE:FUBO), which is getting into sports wagering, is also component of the group. Short interest group is 15 percent inward that name, indicating bearish traders could follow playing with flame if takeover rumors show accurate.

As for DraftKings, it has the sustenance of some prominent investors, including Cathie Wood’s ARK Investment Management.

Since Dec. 20, ARK bought to a greater extent than 250,000 shares of DraftKings, adding to its already sizable bet inward the wagering company.