DraftKings' stock sinks as investors balk at the high cost of a push into prediction markets

By Emily Bary and Bill Peters

The sports-betting company sees 'a massive, incremental opportunity' in the hot world of prediction markets

DraftKings on Thursday gave a forecast for $700 million to $900 million in adjusted earnings this year, well below analysts' estimates.

DraftKings missed the mark with its guidance for this year as it plans steep investments in prediction markets.

The lines between sports betting and prediction markets are already blurry, but DraftKings (DKNG) wants a piece of both. CEO Jason Robins said in a statement that the company intends to "deploy growth capital to build the best customer experience in predictions, and acquire millions of customers."

The move comes at a cost. DraftKings on Thursday afternoon gave a forecast for $700 million to $900 million in adjusted earnings before interest, taxes, depreciation and amortization this year. The FactSet consensus was for $981 million.

The company said that the guidance partly reflects planned spending around the push into prediction markets, which Robins sees as "a massive, incremental opportunity." DraftKings' options go beyond sports and include prediction markets for things like index futures and interest rates.

The forecast also reflects "line-of-sight jurisdictions launches and disciplined planning," according to the statement. It doesn't take into account the impact that sporting outcomes could have on results and thus doesn't bake in "the modest benefit from year-to-date sport outcomes."

In premarket trading on Friday, shares of DraftKings sank 15.5%, to put it on track to open around the lowest prices seen since May 2023. The stock was also headed toward the biggest one-day loss since the record 27.8% drop on Nov. 4, 2022.

The drop came as more betting and trading platforms, like sports-betting sites and trading apps like Robinhood (HOOD) and Coinbase, try to keep users engaged with more things to bet on. Robinhood CEO Vlad Tenev this week said he believed the prediction markets were entering a "super cycle." Coinbase on Thursday said the market for predictions was a way to diversify away from crypto.

DraftKings also came up short with its revenue forecast, which calls for $6.5 billion to $6.9 billion in 2026. The FactSet consensus was for almost $7.3 billion.

Fourth-quarter revenue amounted to $1.99 billion, up 43% from a year before and largely in line with the consensus view.

DraftKings shares have shed 45.8% over the past 12 months, while the stock of Flutter Entertainment (FLUT), the parent of rival FanDuel, has slid 49.9% over the same time. In comparison, the S&P 500 index SPX has gained 11.7% over the past year.

-Emily Bary -Bill Peters

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02-13-26 0641ET