DraftKings Reports Third-Quarter 2026 Earnings Shortfall, Analysts Slash Price Targets

DraftKings reported third-quarter 2026 results after the close on Nov. 5 that missed on both revenue and earnings, and the stock fell 21.3% in Friday's session to close at $18.51. Revenue rose 16% to $1.33 billion but fell short of the $1.39 billion analysts expected, and adjusted EPS was a loss of $0.53 against a consensus loss of $0.41, a miss of $0.12. The GAAP loss was $0.94 per share, and adjusted EBITDA was a loss of $316.9 million.

The bigger driver was the outlook. DraftKings lowered its 2026 revenue guidance to $6.35 billion to $6.55 billion from $6.5 billion to $6.9 billion, and cut 2026 adjusted EBITDA guidance to $175 million to $275 million from $700 million to $900 million. Management tied the revision primarily to higher spending on its Predictions business, with planned 2026 investment raised to $650 million to $700 million. It also lowered core adjusted EBITDA guidance to $875 million to $925 million, citing additional iGaming investment and modestly customer-friendly sports outcomes.

Operating trends were mixed. Sportsbook net revenue rose 36% with net revenue margin up about 120 basis points to 6.4%, while iGaming net revenue rose only 2% as promotional spending lifted customer acquisition 76%. Monthly unique payers reached 4.1 million, up 13%. Management introduced 2027 guidance of $7.35 billion to $7.75 billion in revenue and $800 million to $1.0 billion in adjusted EBITDA, and said its 2026 Predictions cohort is on track to pay back in about 20 months.

Analysts responded with target cuts rather than rating changes: BMO Capital lowered its target to $26 from $50 and Bank of America to $23 from $27, both keeping Buy ratings, while MoffettNathanson has a Hold with a $22 target. What to watch: how quickly Predictions volume converts to revenue, regulatory decisions on sports event contracts, and whether core margins hold as iGaming spending continues.