David Moadel
6 min read
Quick Read
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DraftKings drops 4% after CEO Jason Robins signaled pulled-forward marketing spend on prediction markets, compressing near-term margins; Flutter slips 1% on the same concern.
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Robinhood rises 0.8% on the same catalyst, revealing markets reward platforms that already own prediction-market customers over those paying to acquire them.
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DraftKings (NASDAQ:DKNG) stock is sliding in Wednesday morning trading after Tuesday commentary from the company drew focus to plans to lift spending behind its prediction-markets business. Flutter Entertainment (NYSE:FLUT), the parent of FanDuel, is easing on the same worry set, while Robinhood Markets (NASDAQ:HOOD), which offers event contracts of its own, is trading higher.
The Consumer Discretionary Select Sector SPDR Fund (NYSEARCA:XLY) is down 1% in Wednesday morning trading. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down 0.8% on the same session, so part of the move in DraftKings stock reflects broader weakness. Yet, DraftKings stock is falling by several times either fund.
Shares of DraftKings are at $20.92, down 4% in Wednesday morning trading. Meanwhile, Flutter Entertainment stock is at $87.60, down 1% in a smaller sympathy move. Robinhood stock is at $125.27, up 0.8% as the standout of the three.
What DraftKings Said About Spending
Speaking with a Wells Fargo analyst on Tuesday, DraftKings chief executive Jason Robins said sportsbook handle rose 15% year over year month-to-date at the start of the National Football League (NFL) season, and that DraftKings continues to expect roughly $1 billion in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the current year. Robins also said the prediction-markets product had grown quickly, with DraftKings approaching a double-digit share of consumer volume in sports prediction markets.
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