DraftKings (NASDAQ:DKNG) Posts Quarterly Earnings Results, Misses Estimates By $0.12 EPS

Key Points

• DraftKings reported a quarterly loss of $0.53 per share, missing estimates by $0.12, while revenue of $1.33 billion also fell short of expectations despite rising 16.2% year over year.
• Core business indicators remained strong: Monthly Unique Payers grew 13%, Sportsbook net revenue rose 36%, and the company gained Sportsbook share for a fourth consecutive quarter.
• DraftKings cut its 2026 outlook and lowered Adjusted EBITDA guidance to $175 million–$275 million, citing increased investment in its Predictions business. Shares fell 21.3% on Friday amid concerns about spending, profitability, and regulatory uncertainty.

DraftKings (NASDAQ:DKNG - Get Free Report) issued its earnings results on Friday. The company reported ($0.53) EPS for the quarter, missing the consensus estimate of ($0.41) by ($0.12), Briefing.com reports. DraftKings had a negative return on equity of 11.26% and a negative net margin of 2.68%. The business had revenue of $1.33 billion for the quarter, compared to the consensus estimate of $1.39 billion. During the same quarter in the prior year, the firm posted ($0.26) earnings per share. The business's revenue was up 16.2% compared to the same quarter last year.

Here are the key takeaways from DraftKings' conference call:

• Core business momentum remained strong: third-quarter revenue rose 16% year over year, Monthly Unique Payers increased 13%, and Sportsbook net revenue grew 36% on 12% handle growth. DraftKings also said it gained year-over-year Sportsbook share for a fourth consecutive quarter.
• DraftKings sharply reduced its 2026 Adjusted EBITDA guidance to $175 million–$275 million from $700 million–$900 million, primarily because it raised its Predictions investment to $650 million–$700 million. Third-quarter Adjusted EBITDA was negative $317 million, largely reflecting that investment.
• Management cited strong early Predictions traction, with more than 1.6 million customers engaged year to date and the 2026 cohort expected to pay back in about 20 months. The company expects $650 million–$750 million in Predictions revenue in 2027, though customer promotions are currently offsetting much of the business’s gross revenue.
• For 2027, DraftKings forecast revenue of $7.35 billion–$7.75 billion and Adjusted EBITDA of $800 million–$1 billion. It expects core-business Adjusted EBITDA of about $1.2 billion, with margins reaching approximately 18%, while Predictions investment steps down from 2026.
• The Predictions outlook remains exposed to legal and regulatory uncertainty, including the possibility that sports event contracts could be restricted or end in 2028. Management said it would adjust investment as developments unfold and argued that customer cross-sell could support payback even if sports contracts disappear.

DraftKings Trading Down 21.3%

NASDAQ DKNG traded down $5.01 on Friday, hitting $18.51. 69,879,748 shares of the company's stock were exchanged, compared to its average volume of 11,890,465. The stock has a 50-day moving average of $21.51 and a 200-day moving average of $24.06. DraftKings has a 52 week low of $16.55 and a 52 week high of $36.98. The company has a quick ratio of 1.02, a current ratio of 1.02 and a debt-to-equity ratio of 3.22.

More DraftKings News

Here are the key news stories impacting DraftKings this week:

• Positive Sentiment: Revenue grew 16.2% year over year to $1.33 billion, and management sees prediction markets as a potential growth driver, forecasting as much as $750 million in revenue from the business in 2027. Article: DraftKings Stock Dives on Q3 Miss, Lower Guidance
• Negative Sentiment: Third-quarter results missed expectations: revenue was $1.329 billion versus roughly $1.39 billion expected, while the loss of $0.53 per share was deeper than analysts’ forecast. Article: DraftKings shares plunge as earnings miss and 2027 outlook disappoints
• Negative Sentiment: DraftKings cut its 2026 revenue outlook to $6.35 billion–$6.55 billion from $6.5 billion–$6.9 billion. Reports also characterized its initial 2027 outlook as disappointing, adding to concerns about near-term growth and profitability. Article: DraftKings Cuts Outlook as It Pours More Money Into Prediction Markets
• Negative Sentiment: Investors appear concerned that substantial spending to build the prediction-markets business could weigh on margins and delay profits. Reports of Senator Elizabeth Warren probing the product add regulatory uncertainty. Article: DraftKings Investors Disappointed by Prediction Market Investment Article: Elizabeth Warren Is Probing DraftKings’ Product

Analyst Upgrades and Downgrades

Several research firms have commented on DKNG. Moffett Nathanson reiterated a "neutral" rating and issued a $22.00 price objective on shares of DraftKings in a report on Thursday, October 22nd. Citizens Jmp reduced their target price on shares of DraftKings from $37.00 to $35.00 and set a "market outperform" rating for the company in a report on Thursday, September 24th. Morgan Stanley reduced their target price on shares of DraftKings from $36.00 to $31.00 and set an "overweight" rating for the company in a report on Monday, October 19th. Wall Street Zen cut shares of DraftKings from a "hold" rating to a "sell" rating in a report on Saturday, August 15th. Finally, Barclays cut their price objective on shares of DraftKings from $35.00 to $34.00 and set an "overweight" rating for the company in a research report on Monday, August 10th. One equities research analyst has rated the stock with a Strong Buy rating, thirty have given a Buy rating, six have given a Hold rating and three have issued a Sell rating to the stock. Based on data from MarketBeat, the company currently has an average rating of "Moderate Buy" and a consensus target price of $32.79.

Insider Transactions at DraftKings

In other news, Director Jocelyn Moore sold 10,759 shares of the stock in a transaction dated Wednesday, August 19th. The shares were sold at an average price of $24.05, for a total value of $258,753.95. Following the completion of the transaction, the director owned 1,881 shares of the company's stock, valued at approximately $45,238.05. This represents a 85.12% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. 47.18% of the stock is currently owned by corporate insiders.

About DraftKings

DraftKings Inc is a digital sports entertainment and gaming company that operates online and mobile platforms for sports betting, casino gaming and daily fantasy sports. Its offerings include the DraftKings Sportsbook, DraftKings Casino and daily fantasy contests covering a range of professional and collegiate sports.

The company also provides related entertainment and media content through DraftKings Network, along with free-to-play games, promotions and other interactive products designed to complement its sports and gaming platforms.

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