Key Takeaways
- DraftKings stock is up 10% in the past month, helped by Bank of America’s upgrade to Buy.
- Bank of America sees prediction markets as more opportunity than threat, and rival Flutter Entertainment is spending on the same push.
- Kalshi and Polymarket still lead the prediction markets DraftKings is paying to enter.
- At about 20x forward earnings, the stock looks cheap if DraftKings puts 2027 near analysts’ $1.15 billion of EBITDA on Nov. 6.
DraftKings (DKNG) stock is up 10% in the past month, off its lowest prices in more than three years. Much of the bounce came on Oct. 5, when Bank of America upgraded it to Buy and called prediction markets a “greater opportunity than threat.”
That’s a bold call, as prediction markets are why the stock fell. And DraftKings isn’t the only sportsbook paying to get into them: Flutter Entertainment (FLUT) is spending on its own FanDuel Predicts.
Bank of America sees a bigger prize
The stock sank in September after Needham estimated that Kalshi took 76% of sports prediction-market volume in the NFL’s opening week, against 3% for DraftKings’ exchange.
Bank of America analyst Julie Hoover sees room for DraftKings anyway: about $400 million of prediction-market fees in 2027, if those markets stay viable, plus $200 million to $400 million from market-making. DraftKings is spending $200 million to $300 million on predictions this year.
And management puts the overlap between its sportsbook customers and the largest prediction markets at about 1%.
Kalshi still has the lead
CEO Jason Robins called DraftKings’ exchange “already the clear number three,” behind Kalshi and Polymarket, at the NEXTPredict Summit on Oct. 22.
On Oct. 27, Yahoo Finance reported that the NBA had named those two its preferred prediction markets.
TIKR tracks 37 analysts on DraftKings. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on DraftKings, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See DraftKings’ Analyst Ratings
DraftKings is paying for national reach
DraftKings guides to $700 million to $900 million of adjusted EBITDA this year, after its predictions spending. Analysts expect $657 million, then about $1.12 billion in 2027:
Asked in September whether this year’s extra spending means more next year, Robins said, “I think if anything, it’s probably the opposite.”
DraftKings reports after the close on Nov. 5, with a 2027 update promised for the next morning’s call.
Cheap if 2027 holds
Over the past 90 days, analysts cut their 2026 EPS estimate to $0.85 from $1.03, but their 2027 estimate of $1.71 has barely moved.
DraftKings trades at about 20x forward earnings, below its one-year average of about 22x. Flutter trades at about 15x as of today, so DraftKings has to show its bet earns the premium.
Frankly, prediction markets look like more opportunity than threat for DraftKings, even as it pays to chase two rivals that got there first.
If DraftKings keeps its guidance on Nov. 5 and puts 2027 near $1.1 billion, 20x is a cheap valuation.
Of course, if DraftKings points to less than $1 billion for 2027, I’d expect the lows to come back into play.
So what is DraftKings stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what DraftKings could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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 of the stocks mentioned. Thank you for reading, and happy investing!
