DraftKings shares plunge 21% on weak 2027 guidance and prediction market spending

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DraftKings Inc. shares fell 21.3% on Friday after the company issued weak guidance for 2027, a move that erased more than half of its recent gains. The drop came despite the firm reporting third-quarter revenue that beat expectations, highlighting investor focus on future growth prospects rather than current results.

Guidance cut triggers sell-off

DraftKings reported third-quarter revenue of $1.33 billion, a 16% increase from the prior year, according to hoodline.com. Despite this top-line growth, the company lowered its outlook for 2027, which prompted the sharp decline in the stock price. Barchart reported that the weak guidance was the primary driver for the session's losses.

The stock closed at $18.51, down from a previous close of $23.52. Trading volume reached 69,944,743 shares, indicating significant selling pressure. The company’s market capitalisation stood at $9.22 billion following the decline.

Prediction market spending rises

Investors are also weighing the company’s increased spending on prediction markets. TIKR noted that DraftKings now plans to spend up to $700 million on these markets, a rise from Guggenheim’s expected $400 million. Simply Wall St. reported that hopes for Texas betting markets have risen as prediction markets draw scrutiny.

The Wall Street Journal included DraftKings in its list of stocks to watch on Friday. The firm’s heavy investment in prediction markets appears to be a key factor in the current market reassessment of its growth strategy.

Stock under pressure

The fall leaves the stock 48.9% below its 52-week high of $36.98. Over the past year, the share price has dropped 33.7%, and it has declined 11.5% over the last five days. The stock is currently trading 22.8% below its 200-day average, with the 50-day average having crossed below the 200-day average, a technical pattern known as a death cross.

Falling Shares rates the stock Unstable, citing an annualised volatility of 68.5% compared to 13.7% for the benchmark. By Falling Shares' measure, almost all of the move was company-specific, with market and sector factors contributing only marginally.