Key Takeaways
- DraftKings shares fell 27% after it cut its 2026 adjusted EBITDA guidance to $175-$275 million to pay for more Predictions spending.
- Its core business is guided to $1.15-$1.25 billion of 2027 adjusted EBITDA, more than analysts expected from the whole company.
- Flutter’s FanDuel is spending on the same fight, and Robinhood’s event contracts already bring in about what DraftKings expects from Predictions in 2027.
- The test is whether Predictions delivers $650-$750 million of 2027 revenue as its investment falls.
DraftKings (DKNG) stock fell 27% today after it more than doubled its Predictions budget and cut its 2026 guidance to pay for it.
Flutter Entertainment (FLUT), which owns FanDuel, said on Wednesday that prediction markets are pushing up its media costs. And DraftKings is paying to win the same event-contract traders who have made prediction markets a fast-growing line for Robinhood Markets (HOOD).
A much bigger bill
Here’s how its 2026 guidance changed:
- Predictions investment: $650-$700 million, up from $200-$300 million
- Adjusted EBITDA: $175-$275 million, down from $700-$900 million
- Revenue: $6.35-$6.55 billion, down from $6.5-$6.9 billion
CEO Jason Robins says that “combined with the strength of our core, we believe we are set up for an exceptional 2027.”
The core business is holding up
Before the report, analysts expected EBITDA to climb from $660 million this year to $1.13 billion in 2027:
DraftKings now guides 2027 adjusted EBITDA to $800 million to $1.0 billion. But that’s after $250-$350 million of Predictions investment. Before that spending, the core business alone is guided to $1.15-$1.25 billion, more than analysts expected from the whole company. That’s less than half of this year’s spending.
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FanDuel and Robinhood are in this fight too
Flutter’s US adjusted EBITDA fell 94% to $3 million last quarter, after it invested in its prediction-market product. CEO Dan Taylor expects FanDuel’s marketing intensity “to continue in 2027 at levels similar to this year.” If FanDuel keeps spending, can DraftKings really cut its Predictions bill by more than half?
Robinhood’s event-contract revenue grew more than sixfold to $173 million last quarter, a pace of about $700 million a year. Its monthly operating data will show whether those volumes keep climbing as DraftKings’ promotions go after the same traders.
I’d bet on the core
At today’s price, investors are treating Predictions as pure cost. If it gets anywhere near its $650-$750 million 2027 revenue range, I think the selloff went too far.
The risk is that DraftKings has already blown past one Predictions budget this year. Its next report, early next year, will show whether that spending is slowing.
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!
