DraftKings 2026 Revenue Forecast Falls Short of Expectations
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Should l Buy DKNG?
Source: stocktwits
- Revenue Forecast Downgrade: DraftKings forecasts 2026 revenue between $6.5 billion and $6.9 billion, significantly below analysts' expectations of $7.29 billion, resulting in a 15.2% drop in after-hours trading, indicating market concerns about future growth.
- Increased Competitive Pressure: The rise of prediction market platforms like Polymarket and Kalshi poses growing competition for DraftKings and rival Flutter Entertainment, and despite launching its own prediction market product, investor sentiment remains cautious regarding the industry's outlook.
- Stagnant User Growth: Although DraftKings reported a 43% year-over-year revenue increase to $1.99 billion in Q4, its monthly active users remained flat at 4.8 million, highlighting stagnation in user growth, with CFRA Research analysts attributing this to a slowdown in legalization efforts in the U.S.
- Market Outlook: CEO Robins stated that the prediction market industry could reach $10 billion in the coming years and forecasted “hundreds of millions” in annual revenue from DraftKings Predictions, although current market performance requires further observation.
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Analyst Views on DKNG
Wall Street analysts forecast DKNG stock price to rise
29 Analyst Rating
23 Buy
6 Hold
0 Sell
Strong Buy
Current: 25.160
Low
30.00
Averages
42.69
High
53.00
Current: 25.160
Low
30.00
Averages
42.69
High
53.00
About DKNG
DraftKings Inc. is a digital sports entertainment and gaming company. It provides users with online and retail sports betting (together, Sportsbook), online casino (iGaming) and daily fantasy sports product offerings, as well as digital lottery courier, media, and other product offerings. Sportsbook is live with mobile and/or retail sports betting operations pursuant to regulations in 28 states, Washington, D.C., and in Ontario, Canada. It operates iGaming pursuant to regulations in five states and in Ontario, Canada under its DraftKings brand and pursuant to regulations in four states under its Golden Nugget Online Gaming brand. It owns Jackpocket, a digital lottery courier app in the United States. It is both an official daily fantasy and sports betting partner of the NFL, NHL, PGA TOUR, WNBA and UFC, as well as an official daily fantasy partner of NASCAR, an official sports betting partner of the NBA. It also owns and operates DraftKings Network, a multi-platform content ecosystem.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- New Business Strategy: The company is focusing on the 'Predictions' category, which is expected to generate hundreds of millions in annual revenue in the coming years, reflecting management's emphasis on new market opportunities and confidence in future growth.
- Share Repurchase Program: In Q4, DraftKings repurchased 8 million shares, with plans to remain active in buybacks to support shareholder value, showcasing the company's capital management strategy amid strong financial performance.
- 2026 Outlook: DraftKings expects revenue for 2026 to be between $6.5 billion and $6.9 billion, with adjusted EBITDA between $700 million and $900 million, as management emphasizes a commitment to conservative guidance to avoid missing performance targets again.
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- New Business Strategy: The company is focusing on the 'Predictions' category, which is expected to generate hundreds of millions in annual revenue in the coming years, reflecting management's emphasis on new market opportunities and confidence in future growth.
- Share Repurchase Program: In Q4, DraftKings repurchased 8 million shares, with plans to remain active in buybacks to support shareholder value, showcasing the company's capital management strategy amid strong financial performance.
- 2026 Outlook: DraftKings expects revenue for 2026 to be between $6.5 billion and $6.9 billion, with adjusted EBITDA between $700 million and $900 million, as management emphasizes a commitment to conservative guidance to avoid missing performance targets again.
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- Delivery Outlook: Tri Pointe expects to deliver between 1,200 and 1,400 homes in Q4, demonstrating stable delivery capabilities in the current market environment, which enhances its attractiveness to investors.
- Analyst Rating Adjustments: RBC Capital lowered Tri Pointe's price target from $37 to $31, yet Citizens initiated coverage with an Outperform rating, indicating divergent views on the company's future performance in the market.
See More
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- Significant Revenue Growth: DraftKings reported a 43% year-over-year increase in fourth-quarter revenue, reaching $2 billion, showcasing its strong performance in the digital sports entertainment and gaming sector, despite a stock price drop due to weak future forecasts.
- Stable User Metrics: While DraftKings' average monthly unique paying customers remained flat at 4.8 million, the average revenue per customer increased by 43% to $139, indicating success in enhancing customer value.
- Improved Profitability: The company generated a net income of $136 million, a notable turnaround from a loss of $135 million in the prior-year quarter, while adjusted EBITDA soared by 284% to $343 million, reflecting improved operational efficiency.
- Lackluster Future Guidance: DraftKings expects full-year revenue for 2026 to be between $6.5 billion and $6.9 billion, falling short of Wall Street's $7.3 billion expectation, raising investor concerns about intensifying competition, although the CEO views prediction markets as a “massive, incremental opportunity.”
See More
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- Inflation Data Impact: The U.S. January Consumer Price Index rose by 2.4% year-over-year, below the expected 2.5%, marking the smallest increase in seven months, which may prompt the Fed to continue cutting rates, thus providing support for the stock market and alleviating concerns over rate hikes.
- Strong Software Stock Performance: Software stocks like Crowdstrike Holdings and ServiceNow rose over 4% and 3%, respectively, lifting the broader market and indicating a rebound in investor confidence in tech stocks, particularly amid rapid advancements in AI technology.
- Metal Stocks Retreat: Reports of the Trump administration's plans to narrow tariffs on steel and aluminum products led to declines in metal companies, with Century Aluminum falling over 7%, reflecting the negative impact of policy changes on the sector.
See More
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- Earnings Report Disappointment: DraftKings reported Q4 earnings with a 43% year-over-year sales increase and over threefold adjusted EBITDA growth, yet it fell short of Wall Street expectations, resulting in a 13.51% stock drop.
- Conservative Guidance: Management's guidance for only 11% sales growth in 2026 disappointed the market, impacting investor sentiment and leading to significant stock volatility.
- Surge in Trading Volume: Today's trading volume reached 65.6 million shares, approximately 372% above the three-month average, indicating a strong market reaction to DraftKings' earnings report and heightened investor sentiment.
- Market Positioning and Growth Potential: Despite a 53% decline in stock price over the past year, DraftKings' current valuation at 2 times sales and 21 times free cash flow suggests attractive growth potential, particularly in the rapidly expanding sports betting industry.
See More
