DraftKings Shares Plummet 26% After Q3 Miss, Predictions Investment Surge

DraftKings faced a sharp market rebuke on November 6, 2026, after releasing third-quarter earnings that revealed the mounting costs of its aggressive expansion into sports-event contracts (predictions). The stock collapsed 26% intraday, marking fresh 12-month lows as Wall Street reassessed the profitability timeline for the company's high-stakes pivot.

The headline numbers tell a mixed story. Third-quarter revenue climbed 16% to $1.33 billion, driven by increased customer activity and higher sportsbook margins. Sports revenue specifically surged 31.5% to $784 million, while sports consumer volume (wagers and trades across sportsbook and predictions products) jumped 22% to $13.9 billion. Monthly Unique Payers grew 13% year-over-year. CEO Jason Robins touted 1.6 million year-to-date predictions customers and expressed confidence in the long-term opportunity, noting that the broader predictions market exceeded $160 billion in trading volume in October alone, with trillion-dollar annual potential ahead.

However, profitability deteriorated significantly. Net losses nearly doubled to $469 million from $257 million in Q3 2025, while adjusted EBITDA swung to negative $317 million versus negative $126 million a year prior. The culprit: DraftKings raised its 2026 predictions investment forecast to a range of $650 million to $700 million, up from prior estimates. The company also lowered full-year 2026 revenue guidance to $6.35 billion to $6.55 billion, narrowing the midpoint and signaling tempered near-term momentum.

Looking ahead, DraftKings projects 2027 revenue of $7.35 billion to $7.75 billion with adjusted EBITDA of $800 million to $1 billion. The predictions segment alone is expected to contribute $650 million to $750 million in revenue next year, though it will still require $250 million to $350 million in adjusted EBITDA investment. The core business (sportsbook and iGaming) is forecast to generate $6.7 billion to $7 billion in revenue and $1.15 billion to $1.25 billion in adjusted EBITDA. Notably, management flagged that payback periods hinge on regulatory clarity around event contracts, with base-case modeling pointing to a potential Supreme Court decision in the first half of 2028.

DraftKings is not alone in this squeeze. Flutter Entertainment, parent of rival FanDuel, also disappointed Wall Street on November 4, with its stock sliding 6% and having tumbled more than 60% over the past 12 months. Both operators are locked in intense competition with deep-pocketed newcomers and brokerage firms entering the predictions market, a dynamic that has compressed margins and forced massive marketing spend. DraftKings raised customer acquisition spending 76% year-over-year in Q3 to support iGaming growth.

The market's reaction reflects a broader reassessment of the predictions thesis among publicly traded sportsbooks. While DraftKings maintains its top-three position in the segment and projects attractive payback periods (four years or less) even under adverse regulatory scenarios, investors are demanding proof that customer lifetime value and cross-selling benefits justify the near-term cash burn. CasinoAdvisor tracks dozens of operators navigating this same transition, and the sharp repricing of DraftKings shares signals heightened scrutiny of capital allocation and runway among competitors betting big on event contracts.