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DraftKings (DKNG)
NASDAQ:DKNG
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DraftKings
(NASDAQ:DKNG)
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Rating:61Neutral
Price Target:
$26.00
▲(0.50% Upside)
Action:ReiteratedDate:02/14/26
Improving fundamentals and strong free cash flow, reinforced by upbeat earnings-call operating momentum and FY2026 EBITDA guidance, support the score. The main offsets are elevated balance-sheet leverage and very weak technicals (clear downtrend despite oversold readings), with valuation metrics offering limited support due to a negative P/E and no dividend yield.
Positive Factors
Revenue scale and growth
Sustained multi-year revenue expansion to ~$6.1B in 2025 indicates durable market penetration and product-market fit across sports betting, iGaming and DFS. Scale supports operating leverage, supplier/partner negotiation, and long-term customer monetization opportunities if growth momentum persists.
Free cash flow turnaround
Material improvement to consistently positive operating and free cash flow provides durable internal funding for capex, product investment, share repurchases and debt reduction. Stable FCF lessens financing reliance and creates strategic optionality over the medium term.
Product, tech and Sportsbook scale
Built-in product and technology advantages (in-house pricing, data science, uptime) create durable competitive moats in pricing, margins and retention. Combined with large Sportsbook scale, these capabilities help defend market share and extract unit economics as regulated markets deepen.
Negative Factors
Elevated leverage
Material increase in leverage reduces financial flexibility and raises refinancing and covenant risk if cash flow weakens. With limited equity cushion, sustained debt levels amplify downside from margin compression, regulatory costs, or slower-than-expected growth over the medium term.
Thin and volatile margins
Margins remain fragile despite recent improvements; reliance on promotional spend, marketing and sports-outcome variance can quickly swing profitability. Thin operating margins limit shock absorption and make long-term EPS/cash-flow durability sensitive to competition and investing choices.
Predictions early-stage & execution cost
New Predictions initiative is strategically large but operationally nascent; upfront fixed and marketing costs could depress margins if adoption lags. Execution risk and uncertain monetization create a durable medium-term profit and capital allocation uncertainty until scale and ROI are proven.
DraftKings (DKNG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$22.06B
Dividend YieldN/A
Average Volume (3M)16.88M
Price to Earnings (P/E)30.8
Beta (1Y)1.47
Revenue Growth18.51%
EPS Growth37.25%
CountryUS
Employees5,100
SectorConsumer Cyclical
Sector Strength84
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)0.25
Shares Outstanding492,991,400
10 Day Avg. Volume14,770,586
30 Day Avg. Volume16,876,380
Financial Highlights & Ratios
PEG Ratio-34.22
Price to Book (P/B)20.25
Price to Sales (P/S)2.11
P/FCF Ratio19.74
Enterprise Value/Market Cap0.58
Enterprise Value/Revenue2.10
Enterprise Value/Gross Profit5.09
Enterprise Value/Ebitda35.77
Forecast
1Y Price Target
$34.76Price Target Upside34.35% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering29
EPS Forecast (FY)0.38
Revenue Forecast (FY)$6.89B
DraftKings Business Overview & Revenue Model
Company DescriptionDraftKings Inc. operates a digital sports entertainment and gaming company. It offers multi-channel sports betting and gaming technologies, powering sports and gaming entertainment for operators in 17 countries. The company operates iGaming through its DraftKings brand in 5 states, as well as operates Golden Nugget Online Gaming, an iGaming product and gaming brand in 3 states. Its Sportsbook is live with mobile and/or retail betting operations in the United States pursuant to regulations in 18 states. The company's daily fantasy sports product is available in 6 countries internationally with 15 distinct sports categories. In addition, it offers DraftKings Marketplace, a digital collectibles ecosystem designed for mainstream accessibility that offers curated NFT drops and supports secondary-market transactions, as well as owns Vegas Sports Information Network (VSiN), a multi-platform broadcast and content company. DraftKings Inc. was founded in 2011 and is headquartered in Boston, Massachusetts.
How the Company Makes MoneyDraftKings generates revenue primarily from real-money gaming and related services. Its largest revenue streams are: (1) Online Sports Betting: DraftKings earns revenue from the net gaming revenue (NGR) it retains on sports wagers, which is generally the amount wagered (handle) minus winnings paid to customers, adjusted for items such as promotional credits, bonuses, and certain other deductions as reflected in company reporting. Revenue is influenced by betting volume, customer mix, hold rate (the percentage of handle retained after payouts), the scope of sports offered, and the number of jurisdictions where the company is live and licensed. (2) iGaming (Online Casino): In jurisdictions where permitted, DraftKings earns NGR from casino-style games (e.g., slots and table games) in a similar manner—wagers less payouts, adjusted for promotions and other items. iGaming revenue often depends on game mix and player engagement/retention and can be less seasonal than sports betting. (3) Daily Fantasy Sports and Other: DraftKings also earns revenue from DFS contest entry fees (net of prizes paid and promotions) and may generate additional revenue from ancillary sources tied to its ecosystem (e.g., certain media, licensing, or other platform-related revenues when disclosed by the company). Key factors affecting earnings include customer acquisition and retention spending (notably promotions and marketing), state-by-state regulatory and tax structures, fees paid to market-access partners and, where applicable, tribal/casino partners, and the economics of technology and product delivery (including third-party content for iGaming). Significant partnerships and market-access agreements with casinos, racetracks, sports teams/leagues, and media/distribution partners can enable entry into regulated markets, support brand reach, and provide required licensing access; the specific financial terms vary by agreement and are not uniformly public.
DraftKings Key Performance Indicators (KPIs)
Any
Monthly Unique Payers
Tracks the number of distinct users placing bets each month, highlighting customer engagement and the platform's ability to attract and retain a loyal user base.
Tracks the number of distinct users placing bets each month, highlighting customer engagement and the platform's ability to attract and retain a loyal user base.
Data provided by:
The Fly
The FlyDraftKings Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call highlights a strong operational and financial quarter and year: record Q4 revenue and margin expansion, substantial adjusted EBITDA growth, first‑time GAAP net income, meaningful Sportsbook outperformance, active share repurchases, and a clear strategic push into a potentially large Predictions market with favorable regulatory movement. Offsets include conservative FY2026 guidance, prior guidance execution issues (management acknowledged a miss), early‑stage costs and uncertainty around Predictions monetization, flat overall MUPs (impacted by Jackpocket), and short‑term variance from sports outcomes. On balance, the positive results, scale, margin expansion and new growth initiatives materially outweigh the risks and near‑term costs.Q4-2025 Updates
Positive Updates
Record Quarterly Revenue and Margin Expansion
Fourth quarter revenue grew 43% year‑over‑year to nearly $2.0 billion; adjusted EBITDA was $343 million (4x the prior year period) and adjusted EBITDA margin expanded by more than 1,000 basis points year‑over‑year to 17%.
Strong Full‑Year 2025 Results
Fiscal year 2025 revenue grew 27% year‑over‑year to above $6 billion; adjusted EBITDA more than tripled to over $600 million and exceeded the high end of prior guidance; the company reported positive GAAP net income for the first time and repurchased 16 million shares during the year.
Sportsbook Outperformance in Q4
Sportsbook revenue increased 64% year‑over‑year in Q4 to $1.4 billion; handle growth accelerated to 13% year‑over‑year in the quarter; Sportsbook net revenue margin increased 250 basis points to 8% and parlay handle mix rose nearly 500 basis points.
Scale of Sportsbook Business
Fiscal year 2025 Sportsbook handle increased 11% year‑over‑year to $54 billion; total potential payouts (capital at risk) across open wagers were $2.5 trillion, highlighting large customer engagement and exposure.
Capital Allocation and Share Repurchases
Repurchased 8 million shares in the fourth quarter and 16 million shares in fiscal 2025; management expects to remain active with repurchases as adjusted EBITDA grows.
New Growth Opportunity — Predictions
Management is prioritizing 'Predictions' as a major new growth lane: early signals include strong downloads and 3x prior record Super Bowl daily trading volume; company believes Predictions could represent a multi‑billion dollar annual gross revenue opportunity (company cites a $10 billion reference) and is targeting hundreds of millions in annual revenue for DraftKings Predictions in the years ahead.
Product and Technology Advantages
Company emphasizes competitive advantages in product, technology, data science and AI/ML, including #1-rated Sportsbook uptime, in‑house pricing models, a large data/science organization, and integrations (e.g., Crypto.com) that expand market breadth.
Conservative and Measured Guidance for FY2026
Fiscal year 2026 guidance: revenue between $6.5 billion and $6.9 billion and adjusted EBITDA between $700 million and $900 million; management notes guidance reflects planned investments in Predictions and disciplined planning.
Regulatory Developments Favorable to Predictions
CFTC engagement on event contracts and direction to establish clearer standards is viewed as constructive and supportive of expansion of sports‑related Predictions under a defined regulatory framework.
Negative Updates
Conservative FY2026 Guidance and Implied Deceleration
FY2026 guidance is conservative relative to FY2025 performance (management intentionally lowered guide to avoid misses), implying slower revenue growth versus fiscal 2025's 27% increase; management declined to include Predictions revenue in the guide.
Previous Guidance Miss and Management Criticism
Management acknowledged a prior guidance miss (described as a 'self‑inflicted wound') and emphasized a more conservative approach going forward, signaling investor concern and the potential for credibility rebuilding.
Predictions Still Early and Incremental Costs
Predictions is nascent: management did not include material revenue from Predictions in 2026 guidance; expected incremental spend includes tens of millions in fixed/headcount costs plus marketing (no exact figure disclosed), which could weigh on near‑term margins if adoption is slower than hoped.
Monthly Unique Players (MUPs) Flat YoY
Monthly unique players were flat year‑over‑year; company said Jackpocket weakness contributed to this result and, excluding Jackpocket, MUPs grew about 5%.
Variance and Dependence on Sports Outcomes
Management reiterated that variance in sports outcomes can be a short‑term tailwind or headwind; hold percentage volatility (e.g., high NFL hold weeks) affects handle and can complicate near‑term comparisons.
Uncertainty on Promotional and Marketing Spend
While management describes the promo environment as 'rational' today, they signaled they will deploy incremental marketing for Predictions and have flexibility to spend more if needed, introducing execution and ROI risk.
Cannibalization and Early Cross‑Product Dynamics
Management said Predictions had only a very slight impact on January Sportsbook handle and primarily on low‑margin customers, but the long‑term interplay between Predictions and Sportsbook remains an execution and product‑mix risk to monitor.
Company Guidance
DraftKings guided fiscal 2026 revenue of $6.5–$6.9 billion and adjusted EBITDA of $700–$900 million, noting those ranges reflect planned investments in Predictions, incremental marketing (tens of millions of dollars of incremental spend and some fixed head‑count costs), and line‑of‑sight jurisdiction launches (mentioned Maine iGaming and Alberta) while assuming state tax rates remain consistent; management said no material Predictions revenue was included in the guide but expects upside from that initiative and will remain active in share repurchases as adjusted EBITDA grows (16 million shares repurchased in FY2025, 8 million in Q4). The guidance is framed off a FY2025 base where revenue grew 27% to above $6 billion, adjusted EBITDA more than tripled to over $600 million (Q4 revenue nearly $2.0 billion, Q4 adjusted EBITDA $343 million and a 17% adj. EBITDA margin), and Sportsbook scale included $54 billion handle (+11% YoY for FY2025; Q4 handle +13% YoY), Q4 Sportsbook revenue of $1.4 billion (+64% YoY), Sportsbook net revenue margin up ~250 bps to 8%, parlay handle mix up ~500 bps, Q4 hold slightly above 12%, and a 2025–2026 NFL hold of 16%.DraftKings Financial Statement Overview
Summary
Strong multi-year revenue growth and a major profitability/cash-flow turnaround, with 2025 reaching positive net income and strong free cash flow. Offsetting this, operating profitability remains thin and leverage increased materially (higher debt and lower equity), which raises sensitivity if margins or demand weaken.Income Statement
Revenue has scaled meaningfully over time (from about $0.6B in 2020 to $6.1B in 2025), and profitability has improved sharply versus prior years. In 2025 the company reached near break-even at the operating line and delivered a small positive net profit, with gross margin holding in the low-40% range. Offsetting this, operating profitability is still thin (near-zero net margin and slightly negative operating margin), and the prior year (2024) remained meaningfully loss-making—highlighting that profitability is early and could be volatile.66
Positive
Balance Sheet
Leverage has risen: total debt increased to ~$1.93B in 2025 from ~$1.34B in 2024, while equity declined to ~$0.63B, driving debt-to-equity up to ~3.1x. Total assets are relatively stable around $4.5B, and the return on equity turned slightly positive in 2025 after deeply negative levels in 2022–2024. Overall, the balance sheet is more leveraged than in prior years and leaves less cushion if operating results weaken.52
Neutral
Cash Flow
Cash generation improved materially: operating cash flow and free cash flow were strongly positive in 2024 and expanded further in 2025 (operating cash flow ~$663M; free cash flow ~$648M). This is a major turnaround from negative free cash flow in 2020–2022 and modestly negative in 2023. A key watch item is that operating cash flow covers only a modest portion of total debt (coverage ~0.38 in 2025), implying debt reduction capacity depends on sustaining current cash flow momentum.78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 6.05B | 4.77B | 3.67B | 2.24B | 1.30B |
| Gross Profit | 2.50B | 1.82B | 1.37B | 756.19M | 501.86M |
| EBITDA | 259.67M | -319.35M | -586.65M | -1.27B | -1.39B |
| Net Income | 3.71M | -507.29M | -802.14M | -1.38B | -1.52B |
Balance Sheet | |||||
| Total Assets | 4.53B | 4.28B | 3.94B | 4.04B | 4.07B |
| Cash, Cash Equivalents and Short-Term Investments | 1.60B | 788.29M | 1.27B | 1.31B | 2.15B |
| Total Debt | 1.93B | 1.34B | 1.35B | 1.32B | 1.32B |
| Total Liabilities | 3.90B | 3.27B | 3.10B | 2.72B | 2.39B |
| Stockholders Equity | 631.46M | 1.01B | 840.31M | 1.32B | 1.68B |
Cash Flow | |||||
| Free Cash Flow | 647.50M | 407.59M | -115.14M | -729.16M | -517.78M |
| Operating Cash Flow | 662.86M | 417.77M | -1.75M | -625.52M | -419.51M |
| Investing Cash Flow | -166.00M | -566.60M | -90.36M | -208.77M | -195.02M |
| Financing Cash Flow | -222.46M | -144.47M | -63.22M | -16.73M | 1.14B |
DraftKings Technical Analysis
Negative
25.87
Price Trends
28.20
Negative
30.32
Negative
35.97
Negative
Market Momentum
-0.48
Negative
52.08
Neutral
81.79
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DKNG, the sentiment is Negative. The current price of 25.87 is above the 20-day moving average (MA) of 23.92, below the 50-day MA of 28.20, and below the 200-day MA of 35.97, indicating a neutral trend. The MACD of -0.48 indicates Negative momentum. The RSI at 52.08 is Neutral, neither overbought nor oversold. The STOCH value of 81.79 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DKNG.
DraftKings Risk Analysis
DraftKings disclosed 10 risk factors in its most recent earnings report. DraftKings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
DraftKings Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $6.04B | 3.78 | 91.87% | 0.84% | 5.91% | 336.91% | |
73 Outperform | $4.69B | 55.90 | 27.50% | ― | 23.15% | ― | |
73 Outperform | $5.29B | 17.39 | 30.38% | 1.34% | 29.54% | 4389.69% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
61 Neutral | $22.06B | 30.77 | 0.46% | ― | 18.51% | 37.25% | |
50 Neutral | $1.87B | -2.53 | -34.58% | ― | 8.24% | -77.54% | |
49 Neutral | $19.05B | -124.17 | -3.56% | ― | ― | ― |
* Consumer Cyclical Sector Average
DKNG
DraftKings
24.90
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-35.72%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.