DraftKings Stock Price Forecast - DKNG at $34: Can Event Markets Drive a Rebound Toward $49?

NASDAQ:DKNG – From $53 Peak to $34 Range After Guidance Cut and Margin Shock

DraftKings Inc. (NASDAQ:DKNG) is now a classic momentum-to-doubt story. The stock hit roughly $53 in February 2025, then slid about 34% to around $34.21, with a 52-week range of $26.23–$53.61 and a market cap near $17.0 billion. Revenue is still growing – about 4–5% year-over-year in Q3 and roughly 18.5% YoY on a trailing basis – but the multiple has stopped expanding after the company cut its 2025 EBITDA guidance from roughly $1 billion to about $500 million, almost a 50% reset. At around $36, that guidance translated to roughly 35x 2025 EBITDA, more than twice the multiple of faster-growing Flutter, which naturally triggered multiple compression.

DKNG Share Price, Hedge-Fund Positioning and Cross-Signals From Ratings

At roughly $34.21, NASDAQ:DKNG sits well below its 2025 high but remains far above the $26.23 low, reflecting a market that has repriced expectations rather than abandoned the story. Short interest stands around 6.8%, enough to cap exuberance but not high enough to frame this as a consensus short. Hedge-fund ownership remains deep: around 68 hedge-fund portfolios held DKNG at the end of Q3 2025, up from 66, indicating that professional money has reduced valuation optimism but not walked away from the online wagering theme. Ratings are split: quantitative models flag DKNG as a Sell, many fundamental analysts cluster around Hold, while Wall Street’s average stance is still Buy. The price action – a 13–14% loss over 12 months but around 17% gain in the last month – tells you the market is trying to find a new equilibrium after the guidance cut and prediction-market shock.

Business Model Check – Duopoly Economics Meet Volatile Sportsbook Margins

Fundamentally, DraftKings still sits in a high-quality structure: a de facto duopoly in U.S. online sports betting and iCasino with FanDuel. Brown Advisory’s mid-cap growth strategy opened a position specifically to capture that structure – a fast-growing addressable market where two leading players can compound unit economics as more states legalize online wagering. The thesis is simple: if handle keeps rising, hold percentage remains rational, and marketing intensity gradually normalizes, then operating leverage and EBITDA margins should expand over time. The last few quarters have shown why this is not a straight line. Sportsbook net revenue margin – effectively the hold rate after promotions – slipped in Q3 after several quarters of improvement. Because much of DKNG’s cost base is fixed or semi-fixed, that margin wobble fed directly into a multi-year low in gross margins and a return to operating-loss ratios last seen in 2024. In a business where a couple of percentage points on net revenue margin swing hundreds of millions of dollars of profit, investors immediately marked down the stock.

Q3 2025 – Revenue Miss, EPS Miss and Flat Monthly Users

The Q3 print was the catalyst that crystallized the bear case. DraftKings generated about $1.14 billion of revenue versus expectations that were roughly $60 million higher. The loss per share came in at about –$0.52, around $0.11 worse than consensus. Those numbers are not catastrophic in absolute terms, but they were delivered at a scale where investors expected operating leverage, not regression. On the user side, trailing-12-month unique customers reached a record 10.8 million, up 16% year-over-year, but monthly unique payers in the quarter were only about 3.6 million – essentially flat versus the prior year. For a platform that is still priced as a long runway growth story, flat monthly activity and a miss on both revenue and EPS are not acceptable. It reinforced the sense that DKNG is hitting saturation in some core states precisely as new forms of wagering – prediction markets – start siphoning attention and wallet share.

Prediction Markets – Structural Margin Threat and Capital Drain for NASDAQ:DKNG

The rise of Polymarket, Kalshi and similar prediction platforms changed the risk profile around NASDAQ:DKNG. Initially, many investors dismissed them as regulatory curiosities: derivatives platforms built around binary event contracts rather than licensed sportsbooks. That view failed. Weekly trading volume across the leading prediction markets has already hit an estimated $3.8 billion, with activity spanning politics, macro events, tech races and sport-linked outcomes. The problem for DraftKings is straightforward. Prediction markets attack the same dopamine loop as parlays and props but operate under a very different economic model. Fees tend to be closer to 1.5%–2% of notional traded (Kalshi charges around 1.75% on a 50/50 contract), whereas DKNG has historically captured about 6.7% of sportsbook handle as revenue year-to-date. Shift a meaningful slice of sports action from a 6.7% take-rate product to a 1.75% fee product and you compress structural margins before you even add marketing. That is why one of the key research pieces on DKNG labeled prediction markets the “boogeyman” for the stock: they simultaneously force heavy up-front investment and lower the long-run revenue per dollar of customer risk capital.

DraftKings Predictions – Nationwide Rollout Doubles the Addressable US Market

DraftKings has chosen to meet this threat head-on instead of pretending it will fade. After acquiring CFTC-licensed prediction platform Birdrail in October, the company launched “DraftKings Predictions” – its own dedicated prediction-market app and web product. The significance is not cosmetic. Sports betting is legal online in roughly 30 U.S. states; prediction markets, structured as derivatives marketplaces, can operate far more broadly. DraftKings Predictions has launched in 38 states, including heavyweight markets such as California, Texas, Florida and Georgia. Prior to this, DKNG’s legal sports betting operations covered around 167.9 million people. The four newly reachable mega-states alone add about 105.3 million people. In practice, DKNG has almost doubled its potential U.S. reach with one product launch, moving from a mid-sized but deep footprint to something close to national exposure. That matters because DraftKings has already spent about $1.3 billion on marketing over the last twelve months; much of that spend carries national brand impact even when it is booked against a specific state rollout. Prediction markets allow the company to finally monetize that latent brand equity in states where sportsbook apps cannot yet operate.

Economics of Prediction Markets – Lower Take Rate, Different Risk, New Cannibalization

The trade-off is harsh but unavoidable. Prediction markets are capital-light; they take a fixed fee on volume and remain agnostic to the outcome of the event. That solves one problem – the earnings volatility tied to “bad beats” and lumpy sportsbook quarters – but introduces another: structurally lower unit economics. If DKNG captures 1.5%–2.0% of volume in DraftKings Predictions versus 6.7% of handle in the sportsbook, it needs far more turnover per user to reach the same revenue contribution. On top of that, there is a risk of cannibalization: high-value bettors who previously placed novelty, political or event-driven bets on the sportsbook might migrate to cheaper, more flexible prediction contracts. Management views this as a necessary defensive move in the face of intensifying competition. Flutter’s FanDuel Predicts, built with CME Group, is already investing heavily and expects up to a $300 million EBITDA headwind in 2026 from its own prediction rollout. Robinhood is embedding prediction markets inside a brokerage app with tens of millions of accounts. For DraftKings, the alternative to entering prediction markets is ceding the next leg of wagering innovation to rivals. That is not a realistic option if NASDAQ:DKNG wants to remain one of the two core brands in U.S. digital wagering by 2030.

Short- and Medium-Term Profitability – EBITDA Drag Before Any Margin Rebuild

From an earnings-model perspective, DraftKings Predictions is a tactical negative before it becomes a strategic positive. The company now faces another investment cycle: heavy R&D to scale the Birdrail technology, integration of alternative payment rails (including potential crypto support), regulatory work across 38 states, and a fresh wave of marketing to seed the new product. Flutter’s own guidance of up to a $300 million EBITDA drag for FanDuel Predicts in 2026 is the right yardstick; DraftKings will likely see a similar order-of-magnitude impact in its own P&L as it chases market share. That is arriving just after the company appeared to reach its operating-leverage inflection point in its sportsbook and iCasino segments. Instead of gliding into high-20s EBITDA margins, DKNG is now telling investors to accept a shallower slope and more volatility while the prediction platform scales. For a stock still trading in the mid-30s on an implied 35x 2025 EBITDA multiple, the margin of safety is narrow in the near term.

Long-Term Margin Potential – 28% EBITDA Target vs Current Volatility

The more constructive research on NASDAQ:DKNG still pegs long-run EBITDA margins near 28%, in line with what mature online betting operators earn in international markets. A detailed DCF model with a 2024–2034 revenue CAGR around 11.3%, a 28% steady-state EBITDA margin and a 10.37% WACC produces a fair value estimate near $49.20 per share. That implies roughly 43% upside from current levels. The structure of the model matters: it builds in lower-than-previously assumed margins over the next few years to reflect the drag from DraftKings Predictions, then normalizes as customer acquisition costs per active user fall and existing cross-sold users become more profitable. The core question for investors is whether the market is underestimating that normalized earning power because it is too focused on the current guidance reset and Q3 volatility, or whether the 28% margin assumption itself is now too optimistic given the aggressive pricing and lower-fee structure of prediction markets.