DKNG Stock Down 25%, Is It Time To Buy The Dip?
DraftKings stock has fallen by 24.9% in less than a month, from $46.56 on 9/5/2025 to $34.98 now. Should you buy this dip? Dip buying is a viable strategy for quality stocks that have a history of recovering from dips.
As it turns out, DraftKings passes basic quality checks and has returned (median) 17% in one year, and 51% as peak return following sharp dips (>30% in 30 days) historically. For quick background, DKNG provides digital sports entertainment, daily sports betting, iGaming opportunities, and develops licensing software for online and retail sportsbooks and casino gaming platforms across multiple channels.
Price behaviour is one thing, but what do the fundamentals say? Read Buy or Sell DKNG Stock to see the full picture.
DKNG stock has fallen meaningfully recently and we currently find it relatively expensive. While this may feel like an opportunity, there is significant risk in relying on a single stock. On the other hand, there is a huge value to a broader diversified approach. Strategic asset allocation and diversification helps you stay invested. Did you know investors who panicked out of the S&P in 2020 lost significant upside that followed? Trefis High Quality Portfolio and Empirical Asset Management’s asset allocation approach are designed to reduce volatility so you can stay the course.
Historical Median Returns Post Dips
| Period | Past Median Return |
|---|---|
| 1M | 11.7% |
| 3M | 26.4% |
| 6M | 5.9% |
| 12M | 16.8% |
Historical Dip-Wise Details
DKNG had 7 events since 1/1/2010 where the dip threshold of -30% within 30 days was triggered
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- 51% median peak return within 1 year of dip event
- 140 days is the median time to peak return after a dip event
- -4.6% median max drawdown within 1 year of dip event
| 30 Day Dip | DKNG Subsequent Performance | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | DKNG | SPY | 1Y | Peak Return |
Max Drop |
# Days to Peak |
||
| Median | 17% | 51% | -5% | 140 | ||||
| 3312025 | -38% | -8% | 7% | 45% | -5% | 150 | ||
| 4122022 | -30% | 2% | 17% | 27% | -37% | 125 | ||
| 12012021 | -36% | -0% | -50% | 7% | -67% | 7 | ||
| 5122021 | -31% | 3% | -76% | 51% | -76% | 120 | ||
| 10302020 | -36% | -1% | 38% | 103% | 0% | 140 | ||
| 7142020 | -31% | 5% | 48% | 138% | 0% | 248 | ||
| 4012020 | -35% | -27% | 434% | 512% | 0% | 352 | ||
DraftKings Passes Basic Financial Quality Checks
Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.
| Quality Metrics | Value | Quality Check |
|---|---|---|
| Revenue Growth (LTM) | 25.8% | Pass |
| Revenue Growth (3-Yr Avg) | 53.4% | Pass |
| Operating Cash Flow Margin (LTM) | 9.5% | Pass |
| Leverage (see below) | – | Pass |
| => Interest Coverage Ratio | -15.9 | |
| => Cash To Interest Expense Ratio | 68.7 |
Dip buying, while attractive, needs to be evaluated carefully from multiple angles. Such multi-factor analysis is exactly how we construct Trefis portfolio strategies. If you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.