Why DraftKings Stock Dropped Today
Key Points
DraftKings saw a notable improvement in profitability in the fourth quarter.
Yet management's 2026 revenue guidance fell short of analysts' estimates.
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Shares of DraftKings (NASDAQ: DKNG) tumbled on Friday after the digital sports entertainment and gaming leader issued a tepid growth forecast.
By the close of trading, DraftKings' stock price was down more than 13%.
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Profitability is improving
DraftKings' fourth-quarter revenue surged 43% year over year to $2 billion. The company's mobile sports betting operations are now live in 26 states and Washington, D.C., making them available to about half of the U.S. population.
DraftKings' average monthly unique paying customers were flat at 4.8 million, while its average revenue per customer increased 43% to $139. A higher mix of parlay bets and sportsbook-friendly sporting event outcomes contributed to the gains.
All told, the online betting pioneer generated net income of $136 million, compared to a loss of $135 million in the prior-year quarter.
Moreover, DraftKings' adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) soared 284% to $343 million.
A lackluster forecast
Still, investors appeared to focus on the company's 2026 guidance. DraftKings expects full-year revenue of $6.5 billion to $6.9 billion, with adjusted EBITDA of $700 million to $900 million. Wall Street had expected revenue of $7.3 billion.
The shortfall likely sparked concerns about intensifying competition, not just from rival sportsbook operators but also fast-growing prediction markets.
CEO Jason Robins, however, sees prediction markets as a "massive, incremental opportunity" rather than a threat.
"We plan to deploy growth capital to build the best customer experience in predictions, and acquire millions of customers," Robins said. "We have the playbook to execute and win."
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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