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DraftKings (DKNG)
NASDAQ:DKNG
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DraftKings
(NASDAQ:DKNG)
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Rating:59Neutral
Price Target:
$35.00
▼(-1.30% Downside)
DraftKings' overall stock score reflects strong revenue growth and strategic initiatives, which are offset by persistent financial losses and high leverage. The technical indicators suggest caution, while the valuation remains unattractive due to negative profitability. The earnings call provides a mixed outlook with positive long-term strategies but immediate challenges.
Positive Factors
Revenue Growth
Strong revenue growth indicates robust market demand and effective business strategies, enhancing long-term financial prospects.
Strategic Partnerships
These partnerships enhance brand visibility and customer engagement, strengthening DraftKings' competitive position in the market.
Market Expansion
Expanding into new markets like Missouri increases DraftKings' user base and revenue potential, supporting long-term growth.
Negative Factors
High Leverage
High leverage poses financial risks, limiting flexibility and increasing vulnerability to economic downturns, impacting long-term stability.
Negative Profit Margins
Negative profit margins indicate ongoing operational challenges, necessitating improved cost management for sustainable profitability.
Revenue Impact from Sports Outcomes
Significant revenue impact from sports outcomes highlights volatility in earnings, posing challenges to consistent financial performance.
DraftKings (DKNG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$30.57B
Dividend YieldN/A
Average Volume (3M)9.07M
Price to Earnings (P/E)―
Beta (1Y)1.49
Revenue Growth18.51%
EPS Growth37.25%
CountryUS
Employees5,100
SectorConsumer Cyclical
Sector Strength84
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)-0.52
Shares Outstanding497,772,520
10 Day Avg. Volume9,195,716
30 Day Avg. Volume9,074,408
Financial Highlights & Ratios
PEG Ratio0.90
Price to Book (P/B)17.74
Price to Sales (P/S)3.76
P/FCF Ratio43.99
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue0.02
Enterprise Value/Gross Profit0.04
Enterprise Value/Ebitda2.25
Forecast
1Y Price Target
$44.61Price Target Upside25.81% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering30
EPS Forecast (FY)0.67
Revenue Forecast (FY)$7.33B
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 through several key streams: entry fees from daily fantasy sports contests, sports betting operations, and online casino gaming. Users pay to enter fantasy contests, and DraftKings retains a portion of the entry fees as revenue. In the sports betting segment, the company takes a percentage of wagers placed by users, known as the 'vig' or 'juice.' Additionally, DraftKings has partnerships with various sports leagues and teams, which help drive user engagement and brand recognition, while also providing opportunities for advertising and promotional deals. The company's ability to expand into new markets and form strategic alliances with media companies further contributes to its growth and earnings potential.
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:Nov 06, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 12, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted strong revenue growth, strategic marketing agreements, and increased customer engagement. However, it also faced challenges with downward revisions in guidance and significant revenue impact from customer-friendly sports outcomes.Q3-2025 Updates
Positive Updates
Revenue Growth and Positive EBITDA
DraftKings reported expected revenue growth of 24% to 28% for fiscal year 2025, with expected revenue of $5.9 billion to $6.1 billion and positive adjusted EBITDA of $450 million to $550 million.
Exclusive Marketing Agreements
DraftKings secured exclusive marketing agreements with ESPN and NBCUniversal, enhancing brand visibility and customer engagement.
Customer Retention and Engagement
Customer retention rates improved significantly, with NFL week 1 customer retention up over 300 basis points. NFL and NBA handle grew by 13% and 19%, respectively.
Parlay Handle Mix Surge
Parlay handle mix increased by 800 basis points for NFL and 1,000 basis points for NBA season to date.
iGaming Revenue Growth
iGaming net revenue growth accelerated to 25% year-over-year, the fastest since Q1 2024.
Share Repurchase Program Expansion
DraftKings increased its share repurchase program from $1 billion to $2 billion.
Negative Updates
Revision of Fiscal Year 2025 Guidance
DraftKings revised its fiscal year 2025 revenue guidance downward from $6.2 billion to $6.4 billion to $5.9 billion to $6.1 billion.
Impact of Customer-Friendly Sports Outcomes
Customer-friendly sports outcomes negatively impacted revenue by more than $300 million in September and October, affecting quarterly performance.
Negative Adjusted EBITDA in Q3
DraftKings reported negative $127 million of adjusted EBITDA in the third quarter, primarily due to unfavorable sports outcomes.
Concerns Over Prediction Markets
There are concerns about the profitability and competitive dynamics in the prediction markets, with DraftKings planning to focus on states without Sportsbook.
Company Guidance
During the DraftKings Third Quarter 2025 Earnings Call, the company revised its fiscal year 2025 guidance, projecting revenue of $5.9 billion to $6.1 billion and adjusted EBITDA of $450 million to $550 million, a reduction from the previous guidance due to customer-friendly sports outcomes impacting revenue by over $300 million in the past two months. Despite this, DraftKings remains optimistic about its growth, highlighting a 17% year-over-year increase in total sportsbook handle in October and significant gains in parlay handle mix for NFL and NBA. The company also announced upcoming initiatives like the launch of DraftKings predictions and Spanish language functionality, alongside exclusive marketing agreements with ESPN and NBCUniversal. Additionally, DraftKings plans to expand its share repurchase program from $1 billion to $2 billion.DraftKings Financial Statement Overview
Summary
DraftKings exhibits strong revenue growth and improving cash flow metrics, which are positive indicators of its market position and operational potential. However, persistent losses and high leverage pose significant risks to financial stability. The company needs to focus on achieving profitability and reducing debt levels to enhance its financial health and sustain long-term growth.Income Statement
DraftKings has shown significant revenue growth, with a TTM increase of 89.7% compared to the previous year, indicating strong market demand and expansion. However, the company remains unprofitable with a negative net profit margin of -4.9% and an EBIT margin of -0.05%, reflecting ongoing operational challenges and high costs. The gross profit margin of 39.2% suggests some efficiency in cost management, but the negative EBITDA margin of -1.24% highlights the need for improved operational efficiency.65
Positive
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio of 1.81, indicating significant leverage and potential financial risk. The return on equity is negative at -29.5%, reflecting the company's inability to generate profits from shareholders' equity. The equity ratio stands at 15.8%, suggesting a moderate level of equity financing relative to total assets. Overall, the balance sheet shows a need for improved financial stability and reduced leverage.55
Neutral
Cash Flow
DraftKings has demonstrated strong free cash flow growth of 17.1% in the TTM, indicating improved cash generation capabilities. The operating cash flow to net income ratio of 0.38 suggests that the company is generating cash from operations, albeit at a lower level compared to net income. The free cash flow to net income ratio is nearly 1, indicating efficient conversion of net income to free cash flow. Despite these positive trends, the company needs to maintain consistent cash flow improvements to support its growth and reduce reliance on external financing.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.46B | 4.77B | 3.67B | 2.24B | 1.30B | 614.53M |
| Gross Profit | 2.60B | 1.82B | 1.37B | 756.19M | 501.86M | 267.94M |
| EBITDA | 44.89M | -319.35M | -586.65M | -1.27B | -1.39B | -765.85M |
| Net Income | -267.57M | -507.29M | -802.14M | -1.38B | -1.52B | -1.23B |
Balance Sheet | ||||||
| Total Assets | 4.62B | 4.28B | 3.94B | 4.04B | 4.07B | 3.44B |
| Cash, Cash Equivalents and Short-Term Investments | 1.23B | 788.29M | 1.27B | 1.31B | 2.15B | 1.82B |
| Total Debt | 1.91B | 1.34B | 1.35B | 1.32B | 1.32B | 81.61M |
| Total Liabilities | 3.89B | 3.27B | 3.10B | 2.72B | 2.39B | 807.98M |
| Stockholders Equity | 732.29M | 1.01B | 840.31M | 1.32B | 1.68B | 2.63B |
Cash Flow | ||||||
| Free Cash Flow | 619.02M | 407.59M | -115.14M | -729.16M | -517.78M | -385.57M |
| Operating Cash Flow | 667.57M | 417.77M | -1.75M | -625.52M | -419.51M | -337.88M |
| Investing Cash Flow | -194.53M | -566.60M | -90.36M | -208.77M | -195.02M | -227.34M |
| Financing Cash Flow | 78.63M | -144.47M | -63.22M | -16.73M | 1.14B | 2.31B |
DraftKings Technical Analysis
Positive
35.46
Price Trends
33.05
Positive
36.22
Negative
37.59
Negative
Market Momentum
0.32
Positive
55.27
Neutral
24.88
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DKNG, the sentiment is Positive. The current price of 35.46 is above the 20-day moving average (MA) of 34.82, above the 50-day MA of 33.05, and below the 200-day MA of 37.59, indicating a neutral trend. The MACD of 0.32 indicates Positive momentum. The RSI at 55.27 is Neutral, neither overbought nor oversold. The STOCH value of 24.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 1 New Risks
1.
Stock repurchases under our stock repurchase program are discretionary, and we cannot guarantee that our stock repurchase program will achieve the desired objectives. Share repurchases diminish our cash reserves and could also increase the volatility of the trading price of our Class A common stock. Q4, 2024
DraftKings Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $6.83B | 3.82 | 87.17% | 0.84% | 5.91% | 336.91% | |
73 Outperform | $4.98B | 22.80 | 32.35% | 1.34% | 29.54% | 4389.69% | |
72 Outperform | $4.34B | 78.76 | 29.67% | ― | 23.15% | ― | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
59 Neutral | $30.57B | -62.69 | -29.59% | ― | 18.51% | 37.25% | |
54 Neutral | $35.03B | -153.31 | -2.00% | ― | ― | ― | |
47 Neutral | $1.84B | -2.30 | -35.97% | ― | 8.24% | -77.54% |
* Consumer Cyclical Sector Average
DKNG
DraftKings
35.46
-3.83
-9.75%
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RSI
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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.