Key Takeaways:
- The 2-Minute Valuation Model values DraftKings stock at $60 per share in 2 years.
- That’s a potential 77% upside from today’s price of $34 per share.
- DKNG stock is trading near its lowest P/E multiple in years, which is well below its historical average.
- DraftKings is projected to grow EPS by over 1000% over the next 3 years.
- Get accurate financial data on over 100,000 global stocks for free on TIKR >>>
Valued at a market cap of $17.3 billion, DraftKings (DKNG) stock is down over 50% from its all-time highs. DraftKings is a digital sports entertainment and gaming company that provides online sports betting and other products on its platform.
Further, it offers DraftKings marketplace, a digital collectibles ecosystem designed for mainstream accessibility that offers curated NFTs.
Despite this recent volatility, DraftKings remains a leader in the rapidly expanding online sports betting and iGaming market, with analysts expecting substantial earnings growth in the coming years.
With DKNG stock now trading at just $34/share (as of May 7, 2025), DraftKings presents a compelling opportunity for investors looking for high-growth potential at a reasonable valuation.
Let’s see why.
Find the best stocks to buy today with TIKR. (It’s free) >>>
What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- Multiple: How much investors are willing to pay for a business’s earnings.
Our 2-Minute Valuation Model uses a simple formula to value stocks:
Expected Normalized EPS * Forward P/E ratio = Expected Share Price
Revenue growth and margins drive a company’s long-term normalized earnings per share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.
Why DraftKings Stock Looks Undervalued
Forecast
Based on analyst estimates shown in the chart below, DraftKings is expected to achieve significant earnings growth.
EPS is expected to hit $2.74 in two years, driven by a massive 417% jump in 2025, followed by over 30% annual earnings growth in both 2026 and 2027.
This earnings growth for DraftKings stock is likely to be driven by:
- Market expansion: More states continue to legalize online sports betting and iGaming, with DraftKings currently operational in over 20 states and poised to enter additional markets as legislation progresses.
- User monetization improvements: The company has successfully increased its average revenue per user through cross-selling between sportsbook, casino gaming, and daily fantasy sports offerings.
- Operating leverage: As DraftKings scales its platform across more states, it’s benefiting from operational efficiencies, with marketing and promotional expenses becoming a smaller percentage of revenue.
- Technology advantage: DraftKings’ proprietary technology platform allows for rapid product innovation and personalized user experiences, helping it maintain its leading market position despite growing competition.
For our valuation, we’ll estimate that DKNG will reach $2.50 in EPS in 2027.
Check out DraftKings’ full analyst estimates (It’s free) >>>
Is DKNG Stock Undervalued Right Now?
DraftKings stock currently trades at around 28x forward earnings, which is near its all-time low and significantly below its 12-month historical average of 64x, as shown in the P/E chart.
While the stock’s valuation has declined dramatically since early 2025, the underlying business fundamentals remain strong.
For our valuation, we’ll use a conservative forward P/E multiple of 24x, slightly below where the stock trades today, acknowledging the volatile macro environment.
Fair Value of DraftKings Stock
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2027 EPS estimate: $2.50
- Conservative forward P/E multiple: 24x
Expected Normalized EPS ($2.50) * Forward P/E ratio (24x) = Expected Share Price ($60)
The 2-year expected DKNG stock price we would get from this valuation is $60 per share.
With DraftKings stock currently trading at around $34 per share, this implies a potential upside of 76% over the next two years or a 33% annualized return.
DKNG stock is well-positioned to deliver outsized gains to shareholders, given that average annual returns for the broader markets have been around 10%.
Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
Value stocks quicker with TIKR (It’s free, no card required) >>>
What is the Target Price for DKNG Stock?
Analysts think that DraftKings stock could have strong upside today.
Analysts have an average price target of around $54 per share for DKNG stock, indicating they see about 56% upside today for DraftKings based on its current share price:
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact DraftKings’ growth trajectory:
- Regulatory uncertainty: The regulatory landscape for online gambling continues to evolve, and unfavorable legislation could slow market expansion or increase compliance costs.
- Intense competition: DraftKings faces fierce competition from established players like FanDuel and newer entrants, leading to higher customer acquisition costs and price competition.
- Profitability timeline: Although the company shows strong revenue growth, sustained profitability depends on maintaining user engagement while reducing promotional spending.
- Macroeconomic pressures: Economic headwinds could impact discretionary consumer spending on entertainment, including online gambling and sports betting.
TIKR Takeaway
DraftKings presents a compelling risk-reward proposition at its current valuation. The stock’s upside is driven by extraordinary projected earnings growth and a valuation multiple well below historical averages.
While regulatory hurdles and competitive pressures remain, the company’s strong market position in the rapidly expanding online sports betting industry provides a solid foundation for long-term growth.
DraftKings’ improving unit economics will help it capitalize on the continued legalization of online gambling across the United States.
Investors should be prepared for volatility, but if DKNG executes its growth strategy effectively, investors could be rewarded with substantial returns.
Is DKNG stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
