DraftKings’ Robins optimistic on predictions outlook but shares sink on Q3 earnings miss, lower guidance

Despite navigating through choppy air traffic for the first months of the NFL season, DraftKings CEO Jason Robins remains optimistic on the long-term forecasts for the company in a rapidly-changing space.

Over the last year, DraftKings and archrival FanDuel have faced intense competition from multi-billion prediction market operators and the world’s largest online brokerage firms, which have dove headfirst into a pool for sports event contracts. Trading for the controversial asset class surpassed $160 billion in October alone, with potential for eclipsing $1 trillion annually in the coming years.

At DraftKings, more than 1.6 million customers have engaged with the company’s predictions offering year-to-date, said Robins on Friday’s quarterly earnings call. More recently, DraftKings’ metric for Monthly Unique Payers increased 13% year-over-year during the third quarter. By the end of 2027, DraftKings anticipates total revenue to grow 17% at the midpoint of its full-year guidance, with adjusted EBITDA to fall within a range of $700 million to $1 billion.

But the rapid growth has come at a cost, as DraftKings disclosed to investors that it has increased expectations for an investment ramp of at least $650 million this year in predictions. With predictions investments already robust this year, the company reported Adjusted EBITDA of -$317 million, compared with a loss of $126 million in the same quarter of 2025.

Following the release of third quarter earnings, DraftKings shares sunk approximately 22% in Thursday’s after-hours session. As DraftKings completed Friday’s Q3 call, the stock price continued to decline falling 28% from the previous day’s close. The steep regression placed DraftKings on a dreaded list of top stock declines in Friday’s pre-market session, ahead of Nerdwallet and Five9, Inc., which fell 15%+ on subdued earnings.

As of Noon ET, DraftKings traded at $17.60 a share, down 26% on the day. The sell-off pushed DraftKings to fresh 12-month lows. Still, Robins appears buoyant on the company’s long-term outlook.

“The third quarter marked a pivotal moment for DraftKings, as the Predictions offering we have been building is now powering meaningful growth for our business,” he said.

Financial results

DraftKings is not the only major sports betting operator that has seen its stock under pressure in response to the predictions-boom. After Flutter missed Wall Street expectations for quarterly earnings on 4 November, the stock slumped as much as 6% to dip below $80 a share.

While both conglomerates have invested heavily in predictions, competition from newcomers on private markets continues to pressure their stocks. Flutter, the parent company of FanDuel, has plummeted more than 60% over the last 12 months.

In conjunction with the adjusted outlook, DraftKings lowered its 2026 full-year revenue guidance to a range of $6.35 billion to $6.55 billion, down from previous guidance of $6.5 billion to $6.9 billion.

DraftKings’ third-quarter revenue rose 16% to $1.33 billion as customer activity increased, but the online sports betting and predictions giant reported a larger net loss amid higher investment in its event-contract trading business.

Revenue for the three months to 30 September increased by $185 million in comparison with the same period a year earlier. At the same time, its net loss widened to $469 million, nearly doubling totals of $257 million in the year-ago period.

DraftKings attributed revenue growth mainly to increased customer activity and a higher sportsbook margin. Sports consumer volume, which includes customer wagers and trades across its sportsbook and Predictions products , climbed 22% to $13.9 billion.

Meanwhile, sports revenue rose 31.5% to $784 million. Revenue from iGaming, or online casino games, increased 2.1% to $461 million, while revenue from other activities fell 12.5% to $85 million. Additionally, the company said it increased marketing and promotional spending to attract iGaming customers, with customer acquisition spending up 76% year on year during the quarter.

More on DraftKings’ outlook for predictions

Amid the predictions gold rush, DraftKings has raised its expected investment in the segment this year to a range between $650 million and $700 million. The ramp includes, a projected range of $175 million to $225 million in the fourth quarter.

For 2027, the company has forecast revenue of $7.35 billion to $7.75 billion and adjusted EBITDA of $800m to $1bn. In addition, DraftKings expects predictions to contribute $650 million to $750 million in revenue next year, while requiring a further $250 million to $350 million of adjusted EBITDA investment. The core business is forecast to generate revenue of $6.7 billion to $7 billion and adjusted EBITDA of $1.15 billion to $1.25 billion.

The forecasts depend in part on the performance and regulatory status of event contracts, DraftKings said, adding that it would continue to monitor developments.

The company has said Predictions customers are retaining and engaging at levels comparable with sportsbook customers. Those statements and its forecasts are forward-looking estimates.

Timing of a potential SCOTUS decision?

At the end of the quarter, DraftKings had $1.1 billion in cash and cash equivalents, a level that is broadly unchanged from the beginning of the year. Total liabilities rose to $4.43 billion from $3.90 billion at the end of 2025, while stockholders’ equity fell to $180m from $631m.

“Our core business continues to generate significant free cash flow, which we are deploying to fund growth in our Predictions business at attractive payback periods,” said DraftKings CFO Alan Ellingson.

Pressing questions on whether the Supreme Court will take up a case on sports-event contracts dominated the call. Robins went great lengths on the call to inform analysts on DraftKings’ modelling as it relates to the timing of a potential decision. Based on DraftKings’ base case estimate, the company anticipates that the US high court will render a decision in the first half of 2028. Under a scenario in which there is a blanket prohibition on the sports derivatives by July of that year, DraftKings estimates that its 2026 cohort will be fully paid back, with next year’s paybacks to hover around levels of 50%.

“We still think that cohort should pay back in four years or less,” said Robins. “That’s because of the excellent cross-sell we’re seeing onto other products, including non-sports predictions.”

Kathryn Evans contributed to this story