Should DraftKings Stock’s Drop After Earnings Worry You?
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DraftKings (DKNG) stock fell 21.3% on November 6, 2026, the session following its fiscal Q3 2026 report. During the same session, the S&P 500 rose 0.3% and its rivals barely moved. Alongside the results, management cut its 2026 profit forecast as it spends more on predictions, its new exchange where customers trade on events. How deep was the cut, and how much of it comes from predictions rather than the betting business DraftKings already runs?
How Far Did DraftKings Cut Its 2026 Forecast?
DraftKings lowered its fiscal 2026 forecast for adjusted EBITDA, management’s own profit measure, to $225 million at the midpoint. That is down from $800 million in its August guide. Management said the change mainly reflects heavier spending on predictions, now expected at $650 million to $700 million for the year.
Yet the forecast for the betting business also came down. In August 2026, management said that business was on track for about $1 billion of adjusted EBITDA in 2026. It now expects $875 million to $925 million, and put the gap down to more spending to grow iGaming and to sports results that went modestly in the customers’ favor. That is about $100 million of the $575 million cut at the midpoint, so most of the cut comes from predictions.
Sales held up better than profit. Revenue rose 16.2% from a year earlier in fiscal Q3 2026, and the full-year revenue forecast came down to $6.45 billion at the midpoint, from $6.7 billion.
Does DraftKings Expect Predictions Spending To Last?
Management expects predictions spending to fall to $250 million to $350 million in 2027. On the November 6 call, management said it would be surprised if total predictions spending rose that year. For the whole company, it guides 2027 adjusted EBITDA to $800 million to $1 billion, several times its new forecast for 2026.
DraftKings is already paying for that spending. On reported figures, it posted an operating loss of $493 million in fiscal Q3 2026, against a loss of $272 million in the same quarter a year earlier. On management’s adjusted basis, the quarter’s EBITDA was a loss of $317 million, mainly from predictions. The older business kept growing underneath. Sportsbook net revenue rose 36% from a year earlier in the quarter, management said.
Management also tied the size of that spending to the courts. Its base case is a Supreme Court ruling on sports contracts in mid-2028, and it said it will adjust predictions spending as regulation develops. The company would weigh spending more on an early positive signal from the courts and might pull back on a negative one. So the 2027 plan is a forecast that management has said it may change.
The Number DraftKings Holders Should Watch In February
DraftKings is expected to report fiscal Q4 2026 results in February 2027. Management expects predictions revenue to be immaterial in fiscal 2026, as promotions for new customers offset most of the gross revenue the exchange brings in. DraftKings’ spending on predictions in fiscal Q4 2026, which management guided to $175 million to $225 million, is the number to watch in that report.
Does This Mean You Should Act On DKNG?
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