MoffettNathanson Downgrades DraftKings: Are Prediction Markets Killing the Sports Betting King?

DraftKings (NASDAQ:DKNG) got a downgrade from MoffettNathanson to Neutral from Buy connected April 24, with a terms people chopped to $27 from $38. The steadfast acknowledged prediction marketplace contention arsenic the overhang it tin nary longer dismiss. For semipermanent investors, the downgrade reframes the DraftKings banal thesis astir regulatory hazard alternatively than valuation.

DKNG shares person declined sharply. The banal trades astatine $22.64, with a year-to-date diminution of 34%. That slide, alongside a parallel determination successful Flutter Entertainment (NYSE:FLUT), prompted the firm's downgrade.

MoffettNathanson wrote that it is "very precocious to downgrading DKNG and FLUT astatine this point," acknowledging some stocks person declined materially this year. The firm's content that valuations stay charismatic connected blimpish semipermanent forecasts is "no longer capable to support our Buy recommendations."

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The halfway interest is prediction markets. CFTC-regulated platforms similar Kalshi and Polymarket are pulling event-contract measurement from regulated sportsbooks. MoffettNathanson doesn't spot "the clouds lifting connected these stocks until determination is immoderate regulatory clarity connected prediction markets."

DraftKings is investing heavy successful DraftKings Predictions, a federally regulated event-contracts level nether CFTC oversight. That walk pressures near-term profitability adjacent arsenic CEO Jason Robins calls Predictions a "massive, incremental opportunity."

DraftKings operates mobile sports betting successful 26 states positive Washington D.C. and iGaming successful 5 states. The Boston-based relation posted Q4 gross of $1.99 billion, up 43% twelvemonth implicit year, with adjusted EBITDA of $343.2 million.

For 2026, DraftKings guided to gross of $6.5 cardinal to $6.9 cardinal and adjusted EBITDA of $700 cardinal to $900 million. The usher reflects assertive Predictions spending that weighed connected DKNG banal aft the announcement.