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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.

Matt Phillips

11/6/25 4:32PM

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.

Max Knoblauch5h

Southwest reports lower-than-expected Q1 earnings and revenue, declines to offer full-year profit update

Southwest Airlines reported its first-quarter earnings after the bell on Wednesday. Its shares fell more than 6% in after-hours trading.

For the first quarter, Southwest reported:

Adjusted earnings of $0.45 per share, compared to the $0.47 per share expected by Wall Street analysts polled by Factset.
Revenue of $7.25 billion, compared to estimates of $7.27 billion.

The carrier guided for adjusted earnings of between $0.35 and $0.65 per share for its second quarter, a range whose midpoint is below analyst estimates of $0.53 per share. Regarding its full-year 2026 earnings estimate of “at least” $4 per share, Southwest declined to give an update “given the ongoing macroeconomic uncertainty.”

“Achieving this outcome would require lower fuel prices and/or stronger revenue performance to offset higher fuel expense,” Southwest said.

Southwest introduced bag fees last year, ending a more than five-decade-long “bags fly free” policy. Earlier this month, less than a year after the change, it joined its major US rivals in hiking its bag fees by $10 amid surging jet fuel prices.

Southwest, which discontinued its fuel-hedging program last year, said it spent $1.36 billion on fuel and related taxes in the first quarter, up 8.6% year over year.

Matt Phillips5h

ServiceNow dives after reporting sequential decline in profit margins

Cloud software giant ServiceNow — which has been something of a poster child for the AI-related software sell-off — saw its shares fall sharply after delivering Q1 results that included a quarter-on-quarter decline in profit margins.

The company reported:

Revenue of $3.77 billion, higher than the $3.75 billion analyst consensus estimate published by FactSet.
Diluted adjusted earnings of $0.97 per share, on point with the $0.97 analysts had expected.
Subscription revenue of $3.67 billion vs. the $3.65 billion predicted.
Non-GAAP gross margins of 79.5%, down from 80.5% in Q4.

ServiceNow issued guidance for Q2 subscription revenues of between $3.815 billion and $3.820 billion, compared to the $3.75 billion FactSet consensus estimate.

ServiceNow shares have been at the epicenter of the software sell-off driven by the fear that such companies are at risk of being rendered obsolete by AI. The stock was down 33% for the year through the end of the New York trading session on Wednesday.

Matt Phillips6h

IBM falls despite posting better-than-expected Q1 results

Big Blue fell in after-hours trading despite reporting better-than-expected Q1 results, as it didn’t include in the release an internal metric it typically discloses to track the progress of its AI business. IBM reported:

Q1 revenue of $15.92 billion vs. the $15.63 billion FactSet consensus estimate.
Adjusted earnings per share of $1.91 vs. the $1.81 consensus expectation.
Sales of $7.05 billion at its key, high-margin software segment vs. a $6.98 billion consensus of nine analyst estimates.
Sales of $3.33 billion in its infrastructure unit, which houses its growing AI mainframe business, vs. a $3.13 billion consensus estimate.

Unlike recent earnings statements, the company made no mention of an internal metric it used to track its progress in AI, which it called its “generative AI book of business.” That metric stood at $12.5 billion at the end of 2025, per the company.

The infrastructure business is of acute interest to the market, after AI giant Anthropic announced in February that Claude Code could efficiently modernize code bases in the COBOL programming language, which serves as a cornerstone of IBM’s enterprise mainframe business. The language is still widely used in certain industries, such as airlines and finance. (ATMs, for instance, run almost entirely on COBOL.)

Anthropic’s COBOL announcement cut the legs out from under IBM. The stock plunged 13% on February 23, the day of the announcement — its worst daily drop in more than 25 years. And it was down roughly 15% for the year through the end of trading Wednesday.

Rani Molla

Tesla Q1 earnings and revenue beat Wall Street’s estimates

Tesla reported earnings after the bell Wednesday.