DraftKings: A Bit of a Wobble

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Now, DraftKings (DKNG 13.51%) – a name that sounds suspiciously like a wizarding school for gamblers – had a bit of a tumble on Friday. A proper nose-dive, really. It wasn’t a crash, mind you, more of a…wobble. A decidedly unpleasant wobble for those holding the shares, I assure you.

By the time the trading day had coughed up its last breath, the stock was down by more than 13%. A hefty chunk, that. Enough to make a grown investor frown, and perhaps nibble nervously on a biscuit.

A Smidgen of Improvement

The company, you see, had been showing a bit of a sparkle. Revenue in the last quarter surged a respectable 43% to $2 billion. They’ve spread their betting webs to 26 states and Washington, D.C., which means roughly half the country can now lose money with impressive efficiency. A clever bit of marketing, if I do say so myself.

Their monthly customers – those delightful souls handing over their cash – stayed steady at 4.8 million. But they’re squeezing more out of each one – a whopping 43% more, bringing the average spend to $139. Apparently, people are fond of ‘parlay’ bets – a truly baffling concoction that multiplies risk with alarming glee. And, naturally, the sporting events seem to be falling in the right direction for DraftKings. A touch of luck never hurt, eh?

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All this resulted in a profit of $136 million. Yes, you heard correctly. A profit. Compared to a loss last year, it’s like finding a golden ticket in a chocolate bar. Their ‘adjusted EBITDA’ – a phrase that sounds like a particularly nasty tropical disease – soared by a ridiculous 284% to $343 million. Impressive, truly.

A Forecast That Fizzled

But here’s where the trouble began. The company dared to forecast the future. A dangerous game, that. They predicted revenue of $6.5 to $6.9 billion for 2026, with an ‘adjusted EBITDA’ of $700 to $900 million. Wall Street, those demanding creatures, had expected $7.3 billion. A shortfall, you see. A rather large one.

This, naturally, sent shivers down the spines of investors. It suggests the competition is getting fiercer. Not just from other betting companies, but from these newfangled ‘prediction markets’ – places where people wager on everything from the price of tea to the outcome of badger races. Utterly bewildering, if you ask me.

Jason Robins, the CEO – a man who probably counts money in his sleep – insists these prediction markets are a “massive, incremental opportunity.” He plans to throw even more capital at them, build a “best customer experience,” and acquire “millions of customers.” Sounds exhausting, doesn’t it? He claims to have a “playbook” to “execute and win.” We shall see. I’ve seen many a “playbook” gathering dust on a shelf.

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2026-02-14 03:52