DraftKings Stock Price Forecast - DKNG Shares Tanks 7.13% to $32.69 After Kalshi’s $300M Shakeup

NASDAQ: DKNG Plunges 7.13% to $32.69 as Prediction Markets Pressure Sportsbooks

DraftKings Inc. (NASDAQ: DKNG) closed sharply lower at $32.69, down 7.13%, erasing nearly $1.2 billion in market value. The selloff followed growing concerns that prediction markets such as Kalshi and Polymarket could threaten traditional sports betting models. Trading volume spiked to 31.3 million shares, almost triple its 3-month average of 11.6 million, showing heavy institutional repositioning as investors reassess exposure to the gambling sector.

Valuation Compression and Rapid Deleveraging at $16.23B Market Cap

With its market capitalization shrinking to $16.23 billion, DraftKings now trades at 3.28x price-to-sales, down from 4.26x a quarter earlier. Its forward P/E has fallen to 16x—a level not seen since early 2023—while price/book sits at 17.16x, indicating elevated equity sensitivity. Despite short interest rising to 6.45% of float, institutions still control 85.06% of shares, implying confidence that the long-term digital wagering trend remains intact.

Revenue Growth Holds at $5.41B with Expanding Margins Despite Volatility

DraftKings’ TTM revenue hit $5.41 billion, up 36.9% year-over-year, while gross profit climbed to $2.34 billion, signaling improving operational efficiency. The company posted 201.21 million in Q2 net earnings with a profit margin of -5.63%, showing progress toward profitability. Operating cash flow surged to $513.7 million, and levered free cash flow stood at $454.6 million, reflecting better cost discipline and customer monetization during major sporting events like the NFL and NCAA seasons.

Earnings Momentum: Q2 Beat Followed by Lowered EPS Projections

In Q2 2025, DraftKings reported $1.51 billion in revenue, beating analyst forecasts, though its EPS of $0.38 missed consensus by three cents. The company’s quarterly earnings growth soared 147.5% YoY, but analysts have trimmed FY2025 EPS estimates to $1.22 and FY2026 to $1.98, citing margin pressure and potential revenue cannibalization from prediction markets. The average 12-month price target stands at $51.71, with Berenberg recently cutting its target from $45 to $43 while maintaining a Buy rating, arguing that the 20%+ selloff is overdone.

Prediction Markets Emerge as New Competitive Disruptor

Platforms like Kalshi—which raised $300 million at a $5 billion valuation—and Polymarket, now boasting over $2.6 billion in monthly trading volume, are capturing investor interest by offering event-based contracts that mirror sports bets. Analysts warn these platforms could divert 5–10% of U.S. sports betting flow, particularly in states where traditional gambling remains unlicensed. However, legal uncertainty looms as three states have filed suits challenging the regulatory classification of these contracts, keeping the risk environment volatile for newcomers and potentially offering a buffer for DraftKings’ licensed operations.

Operational Efficiency and Cost Control Strengthen Investment Case

Despite sector headwinds, DraftKings’ operating margin improved to 9.96%, its best level since 2022. The company’s return on assets (-4.64%) and return on equity (-26.38%) remain negative but are recovering as it transitions from aggressive user acquisition toward profitability. With $1.26 billion in cash and $1.91 billion in debt, its debt-to-equity ratio of 189% remains elevated but manageable given free cash flow improvements and the NBCUniversal advertising partnership, which provides exclusive integration across premium sports events—an essential moat against emerging prediction markets.

Market Position: DKNG Retains 23.9% of U.S. iGaming Market

DraftKings remains the second-largest iGaming player in the United States, holding 23.9% market share as of August 2025. U.S. iGaming and online sports betting revenues reached $6.52 billion in Q2, up 27% year-over-year, with sports betting up 39.5% and iCasino revenue up 31.1%. These figures underpin long-term growth potential even as the stock corrects sharply. The American Gaming Association now reports that 33.5% of total U.S. gaming revenues come from online channels—up from 13% in 2021—demonstrating that the structural trend continues in DraftKings’ favor.

Institutional Moves and Insider Sentiment

Institutional ownership exceeding 85% suggests strong professional confidence in the long-term upside. Recent insider activity, available at TradingNews Insider Transactions, indicates limited selling pressure during the correction phase, hinting that executives view current valuations as temporary. Hedge funds remain overweight in DKNG versus peers such as Flutter (NYSE: FLUT) and PENN Entertainment (NASDAQ: PENN) due to higher digital exposure and scalable technology infrastructure.

Technical Setup and Trading Outlook for NASDAQ: DKNG

Technically, DKNG trades below all key moving averages: 50-day ($43.11) and 200-day ($40.14), with the RSI near 31, signaling an oversold zone. Support sits around $32–33, where buyers previously defended the stock in early 2024. Resistance is clustered near $37.50, with stronger upside potential to $43 if earnings optimism rebuilds. Short-term volatility remains elevated, but momentum indicators imply that the $33 zone may act as a long-term accumulation range for opportunistic investors.

Forward Guidance and Sector Valuation Context

Analysts project FY2025 revenue of $6.28 billion and FY2026 of $7.49 billion, reflecting a two-year CAGR of 17.5%. Growth estimates call for 409% EPS expansion this year, moderating to 61.8% in 2026. Compared with peers—Flutter at 29x forward P/E and PENN at 48x—DraftKings’ 16x forward multiple appears deeply discounted. The company’s pivot toward profitability, ongoing partnerships, and early AI-powered odds optimization should sustain long-term valuation expansion once market sentiment stabilizes.

Analyst Consensus and Final Market View

Wall Street remains broadly constructive: 13 analysts rate NASDAQ: DKNG as a Strong Buy, 9 as Buy, and 4 as Hold. The average target of $51.71 implies 58% upside from the current price. Given the oversold conditions, improving fundamentals, and temporary fear over prediction markets, the evidence supports a Buy rating. DraftKings’ strategic positioning in legalized sports betting, coupled with its NBCUniversal alliance and disciplined cost control, reinforces its ability to rebound toward the $43–$51 range once sentiment shifts.

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