Copyright Benzinga
Sports betting company DraftKings Inc (NASDAQ:DKNG) could provide more details on how it is competing against prediction markets and its recent acquisition in the space when the company report third-quarter financial results Thursday after market close. • DKNG is testing key support levels. Get the details here. Here are the earnings estimates, what analysts are saying and key items to watch. Earnings Estimates: Analysts expect DraftKings to report third-quarter revenue of $1.23 billion, up from $1.09 billion in last year's third quarter, according to data from Benzinga Pro. The company has beaten analyst estimates for revenue in five of the past 10 quarters overall, including the recently reported second quarter. Analysts expect DraftKings to report a loss of 40 cents per share in the third quarter, down from a loss of 17 cents per share in last year's third quarter. The company has beaten analyst estimates for earnings per share in nine of the last 10 quarters overall, including the most recently reported second quarter. Read Also: Top Stocks With Earnings This Week: Joby, IonQ, AMD and More What Analysts Are Saying: Bank of America Securities analyst Shaun C. Kelley downgraded both DraftKings and peer company Flutter Entertainment (NYSE:FLUT) ahead of their upcoming earnings reports. The analyst said there are numerous challenges facing the sports betting companies, including the rise of prediction markets. Kelley downgraded DraftKings stock from Buy to Neutral and lowered the price target from $48 to $35. Items such as unfavorable sports outcomes, underperformance in iGaming, tax headwinds and more could hurt DraftKings going forward, Kelley said in a new investor note. “Relentless headwinds could recalibrate long-term earnings,” Kelley said. The analyst said DraftKings’ structural hold doesn’t “look so structural anymore,” noting that third-quarter and fourth-quarter sports outcomes could lead to volatility in financials. Kelley said DraftKings’ model “is highly sensitive to Hold.” “Additionally, we think prediction markets present a challenging near-term narrative.” The analyst said even without the other headwinds, the stock would get downgraded “solely on prediction markets.” Here are other analyst ratings for DraftKings and their price targets: BMO Capital: Maintained Outperform rating, lowered price target from $65 to $63 Bernstein: Maintained Outperform rating, lowered price target from $55 to $50 Stifel: Maintained Buy rating, lowered price target from $51 to $50 Truist: Maintained Buy rating, lowered price target from $55 to $50 Susquehanna: Maintained Positive rating, lowered price target from $64 to $59 Key Items to Watch: Prediction markets will likely be one of the hottest topics when DraftKings reports, especially during the Q&A portion of the conference call. The company will likely highlight its recently announced acquisition of Railbird Technologies, a federally licensed exchange company for prediction markets regulated by the Commodity Futures Trading Commission. The acquisition is likely to help boost DraftKings into the regulated event contract space. The company plans to launch a mobile app with event contracts called DraftKings Predictions. Investors and analysts will want to hear more about the timeline and the potential revenue opportunity from cross-selling existing customers. Robinhood Markets (NASDAQ:HOOD) reported quarterly financials on Wednesday and showed strong growth for its event contracts business, which is now doing more than $100 million in annualized revenue. The company said Event Contracts Traded in the third quarter more than doubled from the second quarter to 2.3 billion in the quarter. Event contracts traded in October for Robinhood already surpassed the third-quarter total with 2.5 billion contracts for the month. DraftKings’ third quarter will include the start of the 2025 NFL season, which is expected to set records for sports betting and will likely see a surge of new users wagering with prediction markets. The American Gaming Association predicts that $30 billion will be wagered on the 2025 NFL season with legal sportsbooks in the U.S., up 8.5% year-over-year. DraftKings is one of the biggest winners of this total and the third quarter results could show how some unfavorable outcomes with lots of favorites winning impacted results. The company has had to adjust guidance previously based on quarters with unusually favorable outcomes for customers, including NFL games. DraftKings reported record revenue, net income and adjusted EBITDA in the previous quarter, making this one important to show continued growth and strong financial metrics. The company maintained its full-year guidance for revenue and adjusted EBITDA after second-quarter results despite a double beat and some records. Investors and analysts will want to see guidance stay the same or increase, with lowered guidance having the possibility of sending shares even lower. DKNG Price Action: DraftKings stock closed Wednesday down 2.41% to $27.92, with shares hitting a new 52-week low of $27.89 during the day's trading session. DraftKings stock is down 23.1% year-to-date in 2025, with shares down over 20% in the last month alone. Read Next:
