DraftKings (DKNG) Stock Forecast & Price Target

DraftKings is supported by strong underlying demand, with 3Q MUPs up 13% y/y to 4.1 million, ARPMUP up 3% to $109, and Sports Consumer Volume up 22% y/y to $13.9 billion, while sportsbook net revenue margin expanded 120 bps to 6.4% and the business gained share for a fourth consecutive quarter. Its outlook is reinforced by a broadening product mix and improving economics, as iGaming customer acquisition rose 76% y/y, the company now reaches most states with sports betting and five iGaming states, and management sees potential for about $15 billion of GGR with roughly 35% share and improving operating leverage. Although Predictions spending weighs on near-term EBITDA, the 2026 cohort’s approximately 20-month payback, around $350 million of annualized Adj. Gross Profit, and expected decline in investment by FY27 suggest the spend is an intentional growth investment rather than deterioration, with durable profitability still supported by cross-sell and scale.

DraftKings is facing a less attractive fundamental setup as management cut FY26 revenue guidance to $6.35-6.55 billion and Adj. EBITDA to $175-275 million while boosting Predictions investment to $650-700 million, with new-customer promotions offsetting about 90% of gross revenue and little near-term net contribution. The FY27 outlook also looks pressured, as revenue guidance of $7.35-7.75 billion trails the Street’s roughly $7.58 billion view and EBITDA of $800 million to $1 billion undershoots the roughly $1.11 billion estimate due to another $250-350 million of Predictions spending and heightened uncertainty around ROI. At the same time, core sports results remain volatile, i-gaming margins are expected to compress by 250 bps from heavier promotional and marketing costs, and competitive intensity plus regulatory risk could keep earnings power below expectations even as the business expands.