What Happened?
Shares of fantasy sports and betting company DraftKings (NASDAQ: DKNG) fell 12.7% in the morning session after the company issued a disappointing financial outlook for 2026 that fell short of analysts' expectations.
DraftKings projected its 2026 revenue to be $6.7 billion at the midpoint, below the consensus estimate of approximately $7.3 billion. The company also gave a forecast for adjusted EBITDA of $800 million at the midpoint, well under the $980.6 million analysts had anticipated. This weaker-than-expected guidance overshadowed the company's fourth-quarter results. In the quarter, revenue grew 42.8% from the prior year to $1.99 billion, meeting expectations, but its adjusted earnings per share of $0.36 missed the consensus forecast of $0.41.
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What Is The Market Telling Us
DraftKings’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for DraftKings and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 28 days ago when the stock dropped 7.5% on the news that the NCAA called for a federal halt on college sports betting markets. The organization stepped up its fight against new betting platforms, asking federal regulators to stop trading linked to college sports until stricter national rules were put in place. This request was made in a letter to the Commodity Futures Trading Commission (CFTC). The action showed increasing worry about the quick growth of betting on college sports and its potential impact on student-athletes. For a major sports betting company, this move introduced significant regulatory uncertainty and threatened a key market segment.
DraftKings is down 38.2% since the beginning of the year, and at $22.03 per share, it is trading 58.8% below its 52-week high of $53.49 from February 2025. Investors who bought $1,000 worth of DraftKings’s shares 5 years ago would now be looking at an investment worth $364.05.
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