DraftKings: A Wager on the Turn

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DraftKings, a name now whispered along the rails of the market, has taken a bruising. The stock, a vessel carrying the hopes of many, dipped sharply last week, despite a showing of growth. It’s down about a third from where it was at the start of the year, a slow bleed in a market quick to judge. It reminds a man of the dust bowl farmers, watching their topsoil blow away, even as the wheat pushed up from the ground.

A closer look, though, might reveal something beyond the immediate downturn. A chance, perhaps, to take a small position, to watch the currents shift.

The Prediction Markets: A New Field, or Just Another Wind?

For a time, DraftKings sailed with the wind at its back, buoyed by the legalization of sports betting. But a new challenge has risen – the prediction markets. These platforms, offering contracts tied to outcomes, look a lot like the same game, played by different rules. DraftKings, quick to adapt, has entered this new arena, but the regulatory landscape remains a shifting sand. The company’s CEO, Jason Robins, now speaks of prediction markets as its greatest opportunity since the opening of the floodgates on legal betting. Still, he notes, the sportsbook itself hasn’t felt the pinch – at least, not yet. The newest state, Missouri, has embraced the game with an enthusiasm that’s heartening to see.

The fourth quarter showed a surge in revenue, nearly 43% higher than the year before, reaching $1.99 billion. The sportsbook itself swelled by 64%, to $1.4 billion, with more money wagered than ever. The house, as they say, held its share, a little over 12%, even better on NFL games, reaching 16%. And parlay betting, those long-shot wagers, brought in more revenue. iGaming, too, climbed, but at a more measured pace, 17% to $500 million.

Earnings before interest, taxes, depreciation, and amortization – a mouthful of a phrase, but a measure of true strength – quadrupled compared to a year ago, reaching $343 million. Earnings per share climbed, a small but solid gain from $0.14 to $0.36.

Looking ahead, the company forecasts revenue between $6.5 and $6.9 billion by 2026, a little less than some expected. Adjusted EBITDA is projected to be between $700 and $900 million, also below the consensus. But even at the lower end of the range, that’s still a 14% increase in revenue and a 45% jump in EBITDA. A steady climb, not a wild rush.

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A Small Position, a Watchful Eye?

The conservative guidance has rattled investors, feeding fears that prediction markets will disrupt the business. But DraftKings has continued to grow, and the two markets seem to draw different kinds of players. The sportsbook attracts those who want a quick score, a simple wager on a game. The prediction markets draw those who want to analyze, to speculate, to play a longer game.

The stock currently trades at a forward price-to-earnings ratio of just 16 times the 2026 analyst consensus. That’s a cheap price for a company growing at this rate. If the prediction market proves to be a driver of growth, not a drag, the stock has room to run. A small position, then, to watch how this plays out. To see if DraftKings can navigate these shifting currents, and find a safe harbor.

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2026-02-21 00:53