DraftKings Shares Plunge 21% After Slashing Profit Outlook to Fund Prediction Markets
DraftKings shares fell 21% on Friday after the sports-betting group slashed its full-year profit forecast to pay for a costly push into prediction markets, wiping billions off its market value in a single session.
A quarter that missed on both lines
DraftKings reported third-quarter revenue of $1.33 billion, up 16% on a year earlier but below the roughly $1.39 billion analysts had expected. The adjusted loss came in at $0.53 a share, wider than the $0.41 loss analysts had forecast, and adjusted earnings before interest, tax, depreciation and amortisation swung to a loss of about $317 million, more than double the $126.5 million loss a year earlier. The company's net loss nearly doubled to $469 million. Shares closed 21.3% lower at $18.51, ending a six-session winning streak.
The guidance cut
The outlook, not the quarter, drove the sell-off. DraftKings cut its 2026 adjusted EBITDA guidance to $175 million to $275 million, down from $700 million to $900 million previously, and lowered full-year revenue guidance to $6.35 billion to $6.55 billion, from $6.50 billion to $6.90 billion. The Wall Street Journal noted the shares tumbled after the company cut its outlook to reflect the climbing costs of growing its prediction-markets business.
The prediction-markets bet
The cut largely reflects DraftKings' plan to spend $650 million to $700 million building its Predictions event-contract business this year, up from the $200 million to $300 million included in the earlier forecast, as it races rivals Kalshi and Polymarket. More than 1.6 million customers have used the Predictions product this year, and annualised prediction-market consumer volume reached $10.1 billion in October, according to the company. Monthly unique payers rose 13% to 41 million in the quarter.
What comes next
DraftKings introduced 2027 guidance of $7.35 billion to $7.75 billion in revenue and $800 million to $1.0 billion in adjusted EBITDA, arguing the spending will pay off next year. Bank of America reiterated its Buy rating on the stock on Friday.
