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DKNG's Predictions Bet: Are Upfront Costs Clouding Near-Term Outlook?
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Key Takeaways
DKNG expects 2026 revenues of $6.5B-$6.9B and adjusted EBITDA of $700M-$900M.
DraftKings sees Predictions as long-term upside but assumes no 2026 revenues.
DKNG plans tens of millions in costs and added marketing to scale Predictions.
DraftKings Inc. (DKNG - Free Report) is increasing its focus on its new Predictions vertical, but near-term visibility remains limited. While management pointed to encouraging early traction, it noted that no revenues from Predictions are assumed in its 2026 guidance due to the early stage of the product.
At the same time, the company expects incremental costs in the tens of millions, along with additional marketing investment to scale the platform. While DraftKings can leverage existing infrastructure and marketing channels, the rollout still introduces incremental near-term costs.
This investment phase is also reflected in DraftKings’ 2026 outlook. The company expects revenues between $6.5 billion and $6.9 billion and adjusted EBITDA of $700 million to $900 million, with guidance incorporating investments in Predictions, new jurisdiction launches and disciplined planning as business conditions evolve.
Management emphasized a cautious approach to guidance, deliberately setting expectations at levels it believes are achievable. While this improves forecasting credibility, it also reflects a more measured near-term outlook as the company balances ongoing investments with its broader business performance.
Importantly, DraftKings views Predictions as “all upside” over the long term, with the potential to participate in a sizable emerging market. However, in the near term, the segment remains in an investment phase, with limited visibility into monetization.
Taken together, the combination of upfront investment, guided spending and uncertain near-term revenue contribution is likely to remain a key focus for investors as DraftKings scales this new growth initiative.
DKNG’s Price Performance, Valuation & Estimates
DraftKings’ shares have declined 31.5% in the past three months compared with the industry’s 16.8% fall. In the same time frame, other industry players like Accel Entertainment, Inc. (ACEL - Free Report) and PENN Entertainment, Inc. (PENN - Free Report) have gained 1.2% and 8%, respectively, while Boyd Gaming Corporation (BYD - Free Report) has declined 1.8%.
DKNG Three-Month Price Performance
Image Source: Zacks Investment Research
DKNG stock is currently trading at a discount. It is currently trading at a forward 12-month price-to-sales (P/S) multiple of 1.68, below the industry average of 2.06. Conversely, industry players, such as Accel Entertainment, PENN Entertainment and Boyd Gaming, have P/S ratios of 0.68, 0.28 and 1.56, respectively.
DKNG’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DraftKings’ 2026 earnings per share has declined in the past 60 days.
EPS Trend of DKNG Stock
Image Source: Zacks Investment Research
The company is likely to report solid earnings, with projections indicating a 74.2% surge in 2026. Conversely, industry players like Accel Entertainment, Boyd Gaming and PENN Entertainment are likely to witness a rise of 15%, 2.2% and 117.5%, respectively, year over year in 2026 earnings.
View the Zacks #1 Rank List
Image: Shutterstock
DKNG's Predictions Bet: Are Upfront Costs Clouding Near-Term Outlook?
Key Takeaways
DraftKings Inc. (DKNG - Free Report) is increasing its focus on its new Predictions vertical, but near-term visibility remains limited. While management pointed to encouraging early traction, it noted that no revenues from Predictions are assumed in its 2026 guidance due to the early stage of the product.
At the same time, the company expects incremental costs in the tens of millions, along with additional marketing investment to scale the platform. While DraftKings can leverage existing infrastructure and marketing channels, the rollout still introduces incremental near-term costs.
This investment phase is also reflected in DraftKings’ 2026 outlook. The company expects revenues between $6.5 billion and $6.9 billion and adjusted EBITDA of $700 million to $900 million, with guidance incorporating investments in Predictions, new jurisdiction launches and disciplined planning as business conditions evolve.
Management emphasized a cautious approach to guidance, deliberately setting expectations at levels it believes are achievable. While this improves forecasting credibility, it also reflects a more measured near-term outlook as the company balances ongoing investments with its broader business performance.
Importantly, DraftKings views Predictions as “all upside” over the long term, with the potential to participate in a sizable emerging market. However, in the near term, the segment remains in an investment phase, with limited visibility into monetization.
Taken together, the combination of upfront investment, guided spending and uncertain near-term revenue contribution is likely to remain a key focus for investors as DraftKings scales this new growth initiative.
DKNG’s Price Performance, Valuation & Estimates
DraftKings’ shares have declined 31.5% in the past three months compared with the industry’s 16.8% fall. In the same time frame, other industry players like Accel Entertainment, Inc. (ACEL - Free Report) and PENN Entertainment, Inc. (PENN - Free Report) have gained 1.2% and 8%, respectively, while Boyd Gaming Corporation (BYD - Free Report) has declined 1.8%.
DKNG Three-Month Price Performance
Image Source: Zacks Investment Research
DKNG stock is currently trading at a discount. It is currently trading at a forward 12-month price-to-sales (P/S) multiple of 1.68, below the industry average of 2.06. Conversely, industry players, such as Accel Entertainment, PENN Entertainment and Boyd Gaming, have P/S ratios of 0.68, 0.28 and 1.56, respectively.
DKNG’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DraftKings’ 2026 earnings per share has declined in the past 60 days.
EPS Trend of DKNG Stock
Image Source: Zacks Investment Research
The company is likely to report solid earnings, with projections indicating a 74.2% surge in 2026. Conversely, industry players like Accel Entertainment, Boyd Gaming and PENN Entertainment are likely to witness a rise of 15%, 2.2% and 117.5%, respectively, year over year in 2026 earnings.
DKNG currently has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.