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DraftKings rallied after a Q3 earnings miss and slashed FY2025 guidance.
Analysts cut price targets as revenue growth slows and margins tighten.
Technicals show DKNG struggling at key resistance, signaling downside risk.
DraftKings (DKNG - Free Report) , a Zacks Rank #5 (Strong Sell), is on a cold streak after the stock has fallen over 40% from the summer highs.
Once a favorite among growth investors, the stock is now showing technical weakness with a clear downtrend forming on the chart. Recent results fell short of expectations, prompting analysts to cut earnings estimates and lower price targets.
While user engagement remains steady, rising costs, slowing revenue growth, and narrowing margins have raised concerns about profitability heading into next year.
With momentum turning negative and sentiment softening, DraftKings faces an uphill climb to regain investor confidence. Shares bounced off 2025 lows after the earnings report, but investors might want to cash out now, before the window closes.
About the Company
DraftKings is a digital sports entertainment and gaming company that offers daily fantasy sports, online sports betting, and iGaming products. The company operates a vertically integrated technology platform that allows users to participate in sports wagering and interactive gaming across multiple jurisdictions.
DraftKings has been a leader in the fast-growing U.S. sports betting market, leveraging partnerships with major leagues, teams, and media brands to expand its reach.
However, the company continues to face heavy competition, fluctuating promotional costs, and the challenge of achieving consistent profitability in a crowded and evolving industry.
The company has a market cap over $15B, with a Zacks Style Score of “F” in Value and Momentum.
Q3 Earnings Miss
DraftKings reported a disappointing Q3 8% EPS miss and management slashed its full-year outlook. The company posted an adjusted loss of $0.26 per share vs. $0.24 expected on revenue of $1.14 billion vs. $1.21 billion expected.
Slower growth and rising costs were the culprit, with average monthly unique payers rising just 2%, while revenue per payer increased 3% to $106. Adjusted EBITDA came in at a loss of $126.5 million, more than double the loss from a year ago.
Management cut its FY2025 revenue guidance to $5.9–$6.1 billion and EBITDA to $450–$550 million, down sharply from the prior outlook of $6.2–$6.4 billion in revenue and $800–$900 million in EBITDA.
While leadership emphasized optimism around new initiatives like DraftKings Predictions and expanded partnerships with ESPN and NBCUniversal, the weaker guidance overshadowed those positives.
The company did authorize a $1 billion increase to its share repurchase program, but the earnings miss, margin pressure, and cautious tone have left investors questioning the near-term trajectory for profitability.
Earnings Estimates
Analysts are taking numbers down, and with that price targets are headed lower.
Both the current quarter and next quarter are trending lower over the last 30 days, but the current year has seen a drastic drop over the last 60 days. Numbers for the year have dropped 22%, from $1.45 to $1.13.
Next year gets better, but number have fallen 7% over that same time frame, falling from $2.18 to $2.02.
Several major brokers have reiterated positive ratings on DraftKings but slashed price targets following the earnings miss:
-Benchmark Company maintained its Buy rating but lowered the target to $37 from $43.
-Citigroup kept a Buy and cut the target to $48 from $56.
-Oppenheimer reiterated Outperform, lowering its target to $50 from $55.
-Guggenheim kept a Buy and cut the target to $45 from $55.
-Barclays kept an Overweight rating with a new target of $40, down from $54.
Technical Take
After earnings, the stock traded 2025 lows, a price not seen since late 2023. The stock had a reactionary bounce on the ESPN news, but the stock stalled at the 21-day moving average. DKNG has not gotten about this MA since early September when it was trading over $45.
The stock could finally lift above that level, but due to the fundamental picture illustrated above, any rally should be sold. The 50-day MA is $36.80 and the 200-day MA is $39.30.
Investors should take caution if the recent lows are taken out. There is a 161.8% Fibonacci extension down at $17.50 that could be of interest to short sellers.
In Summary
DraftKings has been in a downtrend all year, and after a disappointing quarter and lowered guidance, that should continue. Revenue growth is slowing, margins are under pressure, and analysts are trimming both earnings estimates and price targets.
While new initiatives like DraftKings Predictions and expanded partnerships offer potential upside, they are unlikely to offset the near-term headwinds. Investors should be cautious, as momentum has turned negative and the risk of further declines outweighs near-term upside.
For now, investors may want to move on from the name and consider Las Vegas Sands (LVS - Free Report) . The stock is a Zacks Rank #1 (Strong Buy) that is consolidating at multi year highs.
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Bear of the Day: DraftKings (DKNG)
Key Takeaways
DraftKings (DKNG - Free Report) , a Zacks Rank #5 (Strong Sell), is on a cold streak after the stock has fallen over 40% from the summer highs.
Once a favorite among growth investors, the stock is now showing technical weakness with a clear downtrend forming on the chart. Recent results fell short of expectations, prompting analysts to cut earnings estimates and lower price targets.
While user engagement remains steady, rising costs, slowing revenue growth, and narrowing margins have raised concerns about profitability heading into next year.
With momentum turning negative and sentiment softening, DraftKings faces an uphill climb to regain investor confidence. Shares bounced off 2025 lows after the earnings report, but investors might want to cash out now, before the window closes.
About the Company
DraftKings is a digital sports entertainment and gaming company that offers daily fantasy sports, online sports betting, and iGaming products. The company operates a vertically integrated technology platform that allows users to participate in sports wagering and interactive gaming across multiple jurisdictions.
DraftKings has been a leader in the fast-growing U.S. sports betting market, leveraging partnerships with major leagues, teams, and media brands to expand its reach.
However, the company continues to face heavy competition, fluctuating promotional costs, and the challenge of achieving consistent profitability in a crowded and evolving industry.
The company has a market cap over $15B, with a Zacks Style Score of “F” in Value and Momentum.
Q3 Earnings Miss
DraftKings reported a disappointing Q3 8% EPS miss and management slashed its full-year outlook. The company posted an adjusted loss of $0.26 per share vs. $0.24 expected on revenue of $1.14 billion vs. $1.21 billion expected.
Slower growth and rising costs were the culprit, with average monthly unique payers rising just 2%, while revenue per payer increased 3% to $106. Adjusted EBITDA came in at a loss of $126.5 million, more than double the loss from a year ago.
Management cut its FY2025 revenue guidance to $5.9–$6.1 billion and EBITDA to $450–$550 million, down sharply from the prior outlook of $6.2–$6.4 billion in revenue and $800–$900 million in EBITDA.
While leadership emphasized optimism around new initiatives like DraftKings Predictions and expanded partnerships with ESPN and NBCUniversal, the weaker guidance overshadowed those positives.
The company did authorize a $1 billion increase to its share repurchase program, but the earnings miss, margin pressure, and cautious tone have left investors questioning the near-term trajectory for profitability.
Earnings Estimates
Analysts are taking numbers down, and with that price targets are headed lower.
Both the current quarter and next quarter are trending lower over the last 30 days, but the current year has seen a drastic drop over the last 60 days. Numbers for the year have dropped 22%, from $1.45 to $1.13.
Next year gets better, but number have fallen 7% over that same time frame, falling from $2.18 to $2.02.
Several major brokers have reiterated positive ratings on DraftKings but slashed price targets following the earnings miss:
-Benchmark Company maintained its Buy rating but lowered the target to $37 from $43.
-Citigroup kept a Buy and cut the target to $48 from $56.
-Oppenheimer reiterated Outperform, lowering its target to $50 from $55.
-Guggenheim kept a Buy and cut the target to $45 from $55.
-Barclays kept an Overweight rating with a new target of $40, down from $54.
Technical Take
After earnings, the stock traded 2025 lows, a price not seen since late 2023. The stock had a reactionary bounce on the ESPN news, but the stock stalled at the 21-day moving average. DKNG has not gotten about this MA since early September when it was trading over $45.
The stock could finally lift above that level, but due to the fundamental picture illustrated above, any rally should be sold. The 50-day MA is $36.80 and the 200-day MA is $39.30.
Investors should take caution if the recent lows are taken out. There is a 161.8% Fibonacci extension down at $17.50 that could be of interest to short sellers.
In Summary
DraftKings has been in a downtrend all year, and after a disappointing quarter and lowered guidance, that should continue. Revenue growth is slowing, margins are under pressure, and analysts are trimming both earnings estimates and price targets.
While new initiatives like DraftKings Predictions and expanded partnerships offer potential upside, they are unlikely to offset the near-term headwinds. Investors should be cautious, as momentum has turned negative and the risk of further declines outweighs near-term upside.
For now, investors may want to move on from the name and consider Las Vegas Sands (LVS - Free Report) . The stock is a Zacks Rank #1 (Strong Buy) that is consolidating at multi year highs.