Is DraftKings Stock A Buy Today As Prediction Markets Grow?

DraftKings (DKNG) generated $6.2 billion in revenue over the past twelve months, climbing from $5.4 billion a year earlier. The stock moved in the opposite direction. Shares fell, losing 40% in the twelve months to October 13, while the S&P 500 returned about 20%. The stock remains a difficult call for investors: yearly sales are still growing, though revenue dipped in the latest quarter, and the company still loses money. So what are buyers paying for DraftKings today, and what do they get?

DraftKings Stock Costs Half The Market’s Multiple On Revenue

Buyers are currently paying 1.6 times DraftKings’ revenue for the stock. That multiple represents roughly half the 3.1 times commanded by the broader S&P 500. Standard price-to-earnings ratios hold no meaning here, because the company lost money over the past twelve months.

In return, buyers acquire a rapidly expanding business. DraftKings’ revenue rose 28.0% a year on average over the past three years. By comparison, S&P 500 revenue grew 5.9% a year on average.

That revenue growth has not yet delivered a profit. DraftKings’ operating margin was -2.9% over the past twelve months. S&P 500 companies, by contrast, kept 18.5% of revenue as operating profit.

Why Did DraftKings’ Revenue Fall In The Second Quarter?

DraftKings’ revenue fell 4.6% from a year earlier in the second quarter of 2026. On the second-quarter call, management blamed the drop on two factors: bettors won more often than usual, and the company spent more to sign up customers.

The bettor wins cost about $80 million of revenue, management said, arising mainly from the Knicks championship and the World Cup group stage. These outcomes occurred in June. World Cup results in July shifted back in DraftKings’ favor, and management said those later results, which fall in the third quarter, mostly offset them. Excluding the bettor wins and the extra spending on customers, management stated that revenue grew 10% from a year earlier.

The extra spending to sign up customers was a deliberate choice. DraftKings leaned in when interest in the NBA Finals and the World Cup surged, acquiring roughly 30% more customers than it had planned. Management expects those customers to generate gross profit for years to come.

Management also maintained its 2026 forecast for adjusted EBITDA at $700 million to $900 million. That range includes spending on Predictions, its new prediction market. Adjusted EBITDA measures profit before interest, taxes, and some non-cash costs.

DraftKings’ Predictions Volume Grew Nearly Fivefold By July

Trading volume on Predictions reached an annual rate of $11 billion in July. That marks a sharp increase from an annual rate of $2.3 billion in April, according to management.

Over 600,000 customers had used Predictions by the second-quarter call. The platform is signing up many new customers in states without a regulated sportsbook, management noted. Revenue from each Predictions customer will be lower than from a sportsbook customer. Yet because Predictions carries higher margins, management expects a similar gross profit per customer over time.

Management also struck a guarded tone. Regulatory questions make the future of Predictions “not entirely certain,” management noted, and the company is investing in Predictions a little more cautiously.

DraftKings’ third-quarter report is the next major event for the stock. Trading volume on Predictions remains the key metric to watch. Volume that keeps climbing would support management’s case that Predictions can win new customers. Volume that stalls would put more weight on the regulatory questions.

Does This Mean You Should Act On DKNG?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

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