Key Takeaways
- DraftKings shares fell 12% in the past week after it cut its 2026 profit guidance to fund a bigger Predictions budget, and four firms downgraded the stock.
- DraftKings expects its core business to earn 1.15-1.25 billion of adjusted EBITDA in 2027, even as Flutter and Robinhood chase the same prediction-market traders.
- At about 17x forward earnings, the stock looks like a buy for patient investors if Predictions spending falls next year.
DraftKings (DKNG) stock is down 12% in the past week after it more than doubled this year’s Predictions budget and cut its 2026 profit guidance.
Flutter Entertainment (FLUT) is fighting for the same prediction-market traders through FanDuel, and so are Robinhood Markets (HOOD) and Kalshi. By Nov. 9, four firms had downgraded DraftKings, and JPMorgan analyst Daniel Politzer called it “increasingly difficult to recommend.”
A $700 million Predictions bill
After the close on Nov. 5, DraftKings reported third-quarter revenue of $1.33 billion, up 16% but short of the roughly $1.4 billion analysts expected. It raised its 2026 Predictions spending to $650-$700 million, from $200-$300 million, and cut its adjusted EBITDA guidance to $175-$275 million, from $700-$900 million.
The rivals aren’t backing off. Flutter saw its US adjusted EBITDA drop 94% to $3 million in the third quarter, and CEO Dan Taylor expects FanDuel’s heavy marketing “to continue in 2027 at levels similar to this year.” Robinhood’s event-contract revenue rose more than sixfold to $173 million. That makes DraftKings’ plan to more than halve its Predictions investment next year, to $250-$350 million, a tall order.
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
The core still earns more than the Street expected
DraftKings guides its core business to $1.15-$1.25 billion of 2027 adjusted EBITDA. After Predictions spending, it guides the whole company to $800 million to $1 billion. That core figure alone is above what analysts expect from the entire company:
The new guidance should pull both years’ estimates lower. But DraftKings also expects $650-$750 million of Predictions revenue in 2027. And CEO Jason Robins told Bloomberg Talks that even if sports contracts go away, “we still will be able to pay back these cohorts in roughly four years.”
Is DraftKings a buy after the downgrades?
The four downgrades came with targets of $21-$22. The average target is now $31, down from $48 a year ago:
At the Nov. 6 close, DraftKings traded at about 17x forward earnings, near the bottom of its range over the past year. The market is pricing Predictions as pure cost, and that makes the stock look like a buy for patient investors. Of course, DraftKings already blew through one Predictions budget this year. The fourth-quarter report, expected in February, will show whether that spending is finally coming down.
So what is DraftKings stock actually worth?
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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!
