DraftKings tumbles after Q3 sales miss, guidance snip
Shares of DraftKings, and rival Flutter Entertainment, were hammered in Q3 over the potential for prediction markets to eat into the traditional sports betting business.
DraftKings shares dove after the online sportsbook reported Q3 sales that fell short of Wall Street estimates and reduced its full-year guidance below the forecast it offered in Q2.
The No. 2 online sports betting company in the US by market share reported:
A Q3 adjusted loss per share of $0.26 vs. the $0.25 loss analysts expected, per FactSet.
Q3 revenue of $1.14 billion vs. estimates of $1.20 billion.
Full-year revenue guidance of between $5.9 billion and $6.1 billion vs. previous guidance of between $6.2 billion and $6.4 billion and the analyst consensus forecast for $6.19 billion.
The company pointed toward bettor-friendly outcomes on NFL games — essentially favorites winning games slightly more often than expected — as part of the reason for the sales miss.
“In September and October, customer friendly sport outcomes impacted our revenue by more than $300 million, as just a handful of NFL games had a pronounced effect,” the company said.
Those numbers are important. But traders, investors, and analysts are also very interested in what DraftKings executives will have to say on the company’s conference call tomorrow morning, particularly about getting its prediction markets business up and running in short order, as it seeks to fend off competitive threats from prediction markets Kalshi and Polymarket.
Prediction markets are currently federally regulated by the CFTC as financial markets rather than subject to the more patchwork state laws on sports gambling. That regulatory advantage has made their emergence a growing concern for the sports betting business.
Such worries are at the heart of sharp underperformance for DraftKings’ stock, which is down about 35% over the last three months. FanDuel’s parent, Flutter Entertainment— which is seen as similarly exposed to the prediction markets threat — is down 30% over that period.
DraftKings recently made an acquisition of a CFTC-regulated exchange as it moves to get its prediction market off the ground. The company has said it expects to launch its DraftKings Predictions mobile app in the coming months.
