Should One Number Scare You About DraftKings Stock?
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DraftKings (DKNG) revenue fell 4.6% from a year earlier in the second quarter of 2026. For a company that holders own for its growth, that decline is the number to worry about. The drop occurred in a quarter when customers bet more money, not less. Management said on its second-quarter call that Sportsbook handle, the total amount customers wagered, rose 11%. So why did DraftKings take in less while its customers bet more?
Why Did DraftKings’ Quarterly Revenue Fall?
According to management, game outcomes favored bettors and DraftKings paid to sign up a wave of new players. Executives said these sports outcomes cost the company about $80 million in revenue in the quarter, attributing the rest of the hit to customer acquisition. Those sign-ups arrived quickly. New customer sign-ups jumped nearly 75% from a year earlier as interest in the NBA Finals and the World Cup surged. Leaving both effects aside, management said revenue rose 10%.
The slowdown did not start in the second quarter of 2026. DraftKings grew its sales 43.3% over the twelve months ended June 2024, and then 25.8% over the twelve months ended June 2025. For the twelve months ended June 2026, sales growth had slowed again to 15.0%. Part of that slowdown is the second-quarter decline itself. Leaving that quarter out, revenue in the other three quarters still grew 22.6% from a year earlier.
Is DraftKings’ Spending On New Customers Paying Off?
The effort has not yet translated into profit. DraftKings reported an operating loss of $68.2 million in the second quarter, compared with operating income of $151 million a year earlier. Management said its adjusted profit would have been higher without the customer-friendly results and the stronger-than-expected sign-ups. DraftKings is also spending heavily elsewhere. Management plans to put $200 million to $300 million into Predictions during 2026. The company operates this product through its own brokerage, exchange, and market maker. This investment compares with about $1 billion in adjusted EBITDA, the company’s own measure of profit, that it expects from the core business in 2026.
Management argues the money is being well spent. The company said underlying customer acquisition costs came in about 25% better than it had expected, and it maintained its 2026 revenue guidance of $6.5 billion to $6.9 billion. Handle in the portion of July after the World Cup ended rose 20% from a year earlier, according to management.
How Far DraftKings Stock Has Already Fallen
DraftKings stock lost 37.7% over the year to October 22, 2026, while the S&P 500 returned 15.1%. The shares now sell for 1.7 times sales, compared with 3.1 times for the S&P 500. The stock has also fallen hard during past market shocks. In the 2022 inflation shock, it fell 63%, compared with 24% for the S&P 500 ETF, and in the 2025 tariff shock it fell 38%, compared with 19%.
How worried should a holder be? Moderately. Management provides a clear reason for a single weak quarter, and growth had already cooled from its 2024 pace before that quarter. For the risk to be worth taking, revenue must grow again in line with handle as game results even out. Management says these results typically normalize over a season. Revenue growth in DraftKings’ third quarter, which the company is expected to report in November 2026, will be the number to watch.
Does This Mean You Should Act On DKNG?
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