Sports activities betting firm DraftKings Inc (NASDAQ:DKNG) might present extra particulars on how it’s competing in opposition to prediction markets and its current acquisition within the area when the corporate report third-quarter monetary outcomes Thursday after market close.
• DKNG is testing key help ranges. Get the details here.
Listed below are the earnings estimates, what analysts are saying and key gadgets to observe.
Earnings Estimates: Analysts anticipate DraftKings to report third-quarter income of $1.23 billion, up from $1.09 billion in final yr’s third quarter, in keeping with knowledge from Benzinga Pro.
The corporate has overwhelmed analyst estimates for income in 5 of the previous 10 quarters total, together with the just lately reported second quarter.
Analysts anticipate DraftKings to report a lack of 40 cents per share within the third quarter, down from a lack of 17 cents per share in final yr’s third quarter.
The corporate has overwhelmed analyst estimates for earnings per share in 9 of the final 10 quarters total, together with probably the most just lately reported second quarter.
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What Analysts Are Saying: Financial institution of America Securities analyst Shaun C. Kelley downgraded both DraftKings and peer firm Flutter Leisure (NYSE:FLUT) forward of their upcoming earnings studies.
The analyst stated there are quite a few challenges dealing with the sports activities betting corporations, together with the rise of prediction markets.
Kelley downgraded DraftKings inventory from Purchase to Impartial and lowered the worth goal from $48 to $35.
Gadgets similar to unfavorable sports activities outcomes, underperformance in iGaming, tax headwinds and extra might damage DraftKings going ahead, Kelley stated in a brand new investor observe.
“Relentless headwinds might recalibrate long-term earnings,” Kelley stated.
The analyst stated DraftKings’ structural maintain doesn’t “look so structural anymore,” noting that third-quarter and fourth-quarter sports activities outcomes might result in volatility in financials.
Kelley stated DraftKings’ mannequin “is very delicate to Maintain.”
“Moreover, we predict prediction markets current a difficult near-term narrative.”
The analyst stated even with out the opposite headwinds, the inventory would get downgraded “solely on prediction markets.”
Listed below are different analyst ratings for DraftKings and their value targets:
- BMO Capital: Maintained Outperform ranking, lowered value goal from $65 to $63
- Bernstein: Maintained Outperform ranking, lowered value goal from $55 to $50
- Stifel: Maintained Purchase ranking, lowered value goal from $51 to $50
- Truist: Maintained Purchase ranking, lowered value goal from $55 to $50
- Susquehanna: Maintained Optimistic ranking, lowered value goal from $64 to $59
Key Gadgets to Watch: Prediction markets will doubtless be one of many hottest subjects when DraftKings studies, particularly throughout the Q&A portion of the convention name.
The corporate will doubtless spotlight its recently announced acquisition of Railbird Applied sciences, a federally licensed change firm for prediction markets regulated by the Commodity Futures Buying and selling Fee.
The acquisition is probably going to assist increase DraftKings into the regulated occasion contract area. The corporate plans to launch a cellular app with occasion contracts known as DraftKings Predictions. Buyers and analysts will wish to hear extra concerning the timeline and the potential income alternative from cross-selling current prospects.
Robinhood Markets (NASDAQ:HOOD) reported quarterly financials on Wednesday and confirmed robust development for its occasion contracts enterprise, which is now doing greater than $100 million in annualized income. The corporate stated Occasion Contracts Traded within the third quarter greater than doubled from the second quarter to 2.3 billion within the quarter.
Occasion contracts traded in October for Robinhood already surpassed the third-quarter complete with 2.5 billion contracts for the month.
DraftKings’ third quarter will embody the beginning of the 2025 NFL season, which is anticipated to set information for sports activities betting and can doubtless see a surge of latest customers wagering with prediction markets.
The American Gaming Affiliation predicts that $30 billion shall be wagered on the 2025 NFL season with authorized sportsbooks within the U.S., up 8.5% year-over-year. DraftKings is without doubt one of the greatest winners of this complete and the third quarter outcomes might present how some unfavorable outcomes with a lot of favorites successful impacted outcomes.
The corporate has needed to regulate steerage beforehand based mostly on quarters with unusually favorable outcomes for patrons, together with NFL video games.
DraftKings reported document income, internet revenue and adjusted EBITDA in the previous quarter, making this one vital to indicate continued development and powerful monetary metrics.
The corporate maintained its full-year steerage for income and adjusted EBITDA after second-quarter outcomes regardless of a double beat and a few information. Buyers and analysts will wish to see steerage keep the identical or improve, with lowered steerage having the potential of sending shares even decrease.
DKNG Value Motion: DraftKings inventory closed Wednesday down 2.41% to $27.92, with shares hitting a brand new 52-week low of $27.89 throughout the day’s buying and selling session. DraftKings inventory is down 23.1% year-to-date in 2025, with shares down over 20% within the final month alone.
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