Key Takeaways
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DraftKings stock is up 10% in the past month, helped by Bank of America’s upgrade to Buy.
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Bank of America sees prediction markets as more opportunity than threat, and rival Flutter Entertainment is spending on the same push.
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Kalshi and Polymarket still lead the prediction markets DraftKings is paying to enter.
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At about 20x forward earnings, the stock looks cheap if DraftKings puts 2027 near analysts’ $1.15 billion of EBITDA on Nov. 6.
DraftKings (DKNG:NASDAQ) stock is up 10% in the past month, off its lowest prices in more than three years. Much of the bounce came on Oct. 5, when Bank of America upgraded it to Buy and called prediction markets a “greater opportunity than threat.”
That’s a bold call, as prediction markets are why the stock fell. And DraftKings isn’t the only sportsbook paying to get into them: Flutter Entertainment (FLUT:NYSE) is spending on its own FanDuel Predicts.
Bank of America sees a bigger prize
The stock sank in September after Needham estimated that Kalshi took 76% of sports prediction-market volume in the NFL’s opening week, against 3% for DraftKings’ exchange.
Bank of America analyst Julie Hoover sees room for DraftKings anyway: about $400 million of prediction-market fees in 2027, if those markets stay viable, plus $200 million to $400 million from market-making. DraftKings is spending $200 million to $300 million on predictions this year.
And management puts the overlap between its sportsbook customers and the largest prediction markets at about 1%.
Kalshi still has the lead
CEO Jason Robins called DraftKings’ exchange “already the clear number three,” behind Kalshi and Polymarket, at the NEXTPredict Summit on Oct. 22.
On Oct. 27, Yahoo Finance reported that the NBA had named those two its preferred prediction markets.
TIKR tracks 37 analysts on DraftKings. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on DraftKings, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See DraftKings’ Analyst Ratings
DraftKings is paying for national reach
DraftKings guides to $700 million to $900 million of adjusted EBITDA this year, after its predictions spending. Analysts expect $657 million, then about $1.12 billion in 2027:
Asked in September whether this year’s extra spending means more next year, Robins said, “I think if anything, it’s probably the opposite.”
DraftKings reports after the close on Nov. 5, with a 2027 update promised for the next morning’s call.
