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

DraftKings (NASDAQ:DKNG) posted its quarterly earnings data on Friday. The company reported ($0.53) EPS for the quarter, missing analysts’ consensus estimates of ($0.41) by ($0.12), Briefing.com reports. DraftKings had a negative net margin of 2.68% and a negative return on equity of 11.26%. The firm had revenue of $1.33 billion during the quarter, compared to the consensus estimate of $1.39 billion. During the same period in the prior year, the company posted ($0.26) earnings per share. The company’s revenue for the quarter 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 Stock Down 21.3%

NASDAQ DKNG traded down $5.01 during trading hours on Friday, hitting $18.51. The company’s stock had a trading volume of 69,879,748 shares, compared to its average volume of 11,890,465. DraftKings has a 52 week low of $16.55 and a 52 week high of $36.98. The company has a debt-to-equity ratio of 3.22, a current ratio of 1.02 and a quick ratio of 1.02. The company’s 50-day simple moving average is $21.51 and its two-hundred day simple moving average is $24.06.

Key Headlines Impacting DraftKings

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

Insider Buying and Selling

In other news, Director Jocelyn Moore sold 10,759 shares of the stock in a transaction that occurred on Wednesday, August 19th. The stock was sold at an average price of $24.05, for a total value of $258,753.95. Following the completion of the sale, the director directly owned 1,881 shares of the company’s stock, valued at $45,238.05. This represents a 85.12% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Corporate insiders own 47.18% of the company’s stock.

Analyst Ratings Changes

A number of brokerages have weighed in on DKNG. Citizens Jmp lowered their target price on DraftKings from $37.00 to $35.00 and set a “market outperform” rating for the company in a report on Thursday, September 24th. Wall Street Zen lowered shares of DraftKings from a “hold” rating to a “sell” rating in a research note on Saturday, August 15th. Wolfe Research began coverage on shares of DraftKings in a report on Wednesday, September 2nd. They issued an “outperform” rating and a $40.00 price target for the company. Zacks Research lowered shares of DraftKings from a “hold” rating to a “strong sell” rating in a report on Tuesday, October 13th. Finally, BTIG Research increased their price objective on shares of DraftKings from $25.00 to $26.00 and gave the stock a “buy” rating in a research report on Thursday, October 29th. One investment analyst has rated the stock with a Strong Buy rating, thirty have assigned a Buy rating, six have assigned a Hold rating and three have assigned a Sell rating to the company’s stock. According to data from MarketBeat, the company presently has a consensus rating of “Moderate Buy” and an average price target of $32.79.

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.