DraftKings Stock Forecast – Is DKNG Stock Undervalued at $32 With a $60 Target?

DraftKings (NASDAQ:DKNG) – Super Bowl risk, prediction markets and a mispriced duopoly

Trading profile and balance-sheet reality for NASDAQ:DKNG

DraftKings (NASDAQ:DKNG) trades around $32.77, up $0.15 on the day, with an intraday range of $31.15–$33.27 and a 52-week range of $26.23–$53.61. That prints a market value of roughly $15.66 billion and tells you straight away the stock is still priced below the last cycle’s euphoria but well above the panic lows. The capital structure behind that quote is not a momentum story; it is a leveraged growth balance sheet that is finally throwing off real cash.

On the income side, the most recent quarter shows $1.14 billion of revenue, growing 4.43% year on year, against $1.09 billion of operating expense, which rose 5.74%. That gap still leaves NASDAQ:DKNG posting a quarterly net loss of $256.79 million, with a net margin of roughly -22.45% and GAAP EPS at -$0.26, but the composition matters more than the headline red ink. EBITDA for the period was around -$205.82 million, yet cash from operations was a positive $287.48 million, up more than 115% year on year, and free cash flow was still $166.47 million despite stepping down about 10.5%.

The balance sheet at stock profile confirms a company that has moved away from survival mode. Cash and short-term investments stand at roughly $1.23 billion, up nearly 40% year on year, with total assets of $4.62 billion against total liabilities of $3.89 billion, which climbed 21.74%. Equity is about $732.29 million, with around 497.77 million shares outstanding and a price-to-book of 22.19. Return on assets is still negative at -14.94%, and return on capital sits around -24.46%, which is what you expect from a business deliberately trading near breakeven while it buys market share. Financing cash flow of about -$101.41 million and investing cash outflows near -$41.83 million left a net cash increase of $144.23 million in the quarter, up almost 74%. On the numbers, NASDAQ:DKNG is still loss-making, but the cash engine is already functioning.

Event-driven seasonality: why Super Bowl and Q4 matter for NASDAQ:DKNG

The near-term setup for NASDAQ:DKNG is dominated by a tight cluster of events: the NFL playoffs, the February 8 Super Bowl, and Q4 earnings expected in mid-February. Historically, the tape reacts hard into that window. Since listing in 2020, the stock has posted an 83.3% win rate in January and a 100% win rate in February, with only one negative month across all those January–February pairs, back in January 2022. That pattern reflects how aggressively traders position around record Super Bowl handle and fresh guidance.

Operationally, Q1 is usually the second-best quarter of the year for DraftKings (NASDAQ:DKNG), only behind Q4, which captures the peak of the NFL and NBA calendar and the MLB playoffs. The current season comes on top of the December rollout of DraftKings’ new prediction market platform, meaning this Super Bowl is the first where the company can monetise both classic sportsbook wagers and event contracts. If the on-field results are book-friendly, the combination of higher hold, record volume and cross-selling from prediction markets into the core app provides a clean path to a very strong Q4–Q1 revenue print. If the outcomes are too customer-friendly, Q1 can easily show compressed hold and a lumpy EBITDA line, exactly as seen in past quarters. The stock’s seasonality reflects that binary risk, and at $32–33 the market is clearly not pricing in perfection.

DraftKings Predictions: event contracts, unregulated states and the real threat from prediction markets for NASDAQ:DKNG

The biggest structural swing factor for NASDAQ:DKNG into the decade is not another sportsbook, it is the secular rise of prediction markets. External research estimates that event markets could push toward $1 trillion in volume by 2030, with over 40% tied to sports, which on paper could become a pool similar in size to 60–80% of today’s licensed sportsbook market. The equity market has treated that projection as a direct threat to the margin profile of DraftKings.

DraftKings responded with a very specific strategy. Its “DraftKings Predictions” platform launched in December across 38 states, with 17 of those offering sports-related event contracts, including the four largest untapped online sports betting markets: California, Texas, Florida and Georgia. Those four states alone have roughly 108 million residents, about 31% of the total US population. The key design choice is that, outside of Florida’s Hard Rock monopoly, the company is offering sports contracts only in jurisdictions where full online sports betting is not yet legal. That pushes event-contract volume into new territory instead of cannibalising the regulated sportsbook handle.

The economic reality inside prediction markets also looks less attractive to the average retail bettor than the headlines suggest, which matters for the long-term wallet share of NASDAQ:DKNG. Estimates show that sports bettors have shifted around $8 billion of handle into event exchanges, equal to about 5% of total sportsbook handle. Over the first 90 days after joining such platforms, bettors lose roughly 7% of wagers, compared with about 1% loss on traditional sportsbook bets. Average ticket size on prediction venues is around $185, more than three times the $55 average at online sportsbooks, and fee structures encourage very high turnover. Internal work comparing event contract odds found pre-game NFL prices on one exchange running about 8% worse than a leading competitor and 6% worse than DraftKings itself once fees are included, with average transaction costs of about $1.62 per 100 contracts.

For NASDAQ:DKNG, that combination of higher bettor loss rates, worse net pricing and high turnover makes event markets a challenging ecosystem to dominate on pure price. Instead, DraftKings is using DraftKings Predictions as an incremental revenue line with a tiny fee rate of about $0.01 per contract, targeted at populations it currently cannot touch with a traditional book. The platform is not built to replace high-margin parlays, which event markets struggle to support because market makers need heavy collateral to write large low-odds combinations. Prediction markets are also structurally limited in their ability to restrict sharp accounts. That is attractive to sophisticated traders but makes it harder for exchanges to protect their own economics. Measured purely in risk terms, the scenario where prediction markets “destroy” DraftKings is far less plausible than the equity sell-off in 2025 implied.

Media dominance: NBCUniversal, ESPN and the customer-acquisition engine behind NASDAQ:DKNG

The second structural lever for DraftKings (NASDAQ:DKNG) is the media stack. Two long-term partnerships have effectively turned the company into the default betting overlay on US major sports broadcasts. A multi-year deal with one national broadcaster delivers exclusive integrations and digital sponsorships across its full sports portfolio, including the streaming rights holder for the upcoming Super Bowl and Spanish-language coverage of this year’s global football tournament. A separate long-term agreement with the leading sports network gives DraftKings the exclusive integration slot across the network’s live sports and digital platforms, including the in-app betting tab.

Taken together, these deals give NASDAQ:DKNG presence on roughly 73% of national NBA broadcasts, on the NFL Kickoff game, on Sunday Night Football and Monday Night Football, and across a large share of nationally televised events in multiple sports. For the business model, this matters more than brand vanity. Every banner in a streaming interface or side panel in a live-score tab is a low-friction funnel into either the sportsbook or the prediction platform, and that funnel operates at a far lower marginal customer-acquisition cost than paid online ads. Fixed fees for these partnerships are high, but the leverage is equally high: once the integration work is done, every incremental same-screen tap scales at minimal extra cost. Over time, this set-up is built to drag casual fans into regulated betting in legal states and into event contracts where OSB is not yet allowed, which is exactly where DraftKings Predictions is targeted.

Handle, hold and the state data behind the growth story for NASDAQ:DKNG

The question after the September 2025 prediction-market headlines was whether event exchanges had materially dented traditional OSB growth. The hard state data say no. Across multiple key jurisdictions, Q4 2025 figures show handles still rising and hold rates climbing even faster, which feeds directly into the revenue line for NASDAQ:DKNG and its peers.

In New York, Q4 sports betting handle increased from about $6.89 billion to $7.63 billion, up 10.7% year on year. Gross gaming revenue jumped from roughly $558.7 million to $779.0 million, a 39.4% surge, as hold expanded from 8.1% to 10.2%, a gain of 210 basis points. North Carolina saw handle rise from around $1.88 billion to $2.29 billion (+21.9%), while GGR moved from $162.5 million to $252.6 million, a 55.5% increase, as hold climbed from 8.6% to 11.0%. Maryland’s handle improved from $1.87 billion to $2.09 billion (+11.9%), with GGR pushing from $177.6 million to $245.3 million (+38.1%) and hold rising from 9.5% to 11.7%. Iowa’s numbers show relatively flat handle, up 1.6% from $903.3 million to $917.5 million, but GGR surging 46.3% from $61.8 million to $90.4 million as hold stepped up from 6.8% to 9.9%. Tennessee’s handle increased from $1.72 billion to $1.88 billion (+7.2%), while GGR moved from $159.9 million to $162.5 million (+6.1%) with hold dipping marginally from 9.3% to 9.2%.

The meaningful point for NASDAQ:DKNG is that total wallet share for OSB is still expanding even when event contracts are grabbing headlines. The fact that New York ranks second in the number of customers linking prediction accounts, behind only California, yet still posts double-digit growth in handle and a double-digit hold rate, reinforces the argument that prediction markets are a small siphon, not a structural leak.

Short-term volatility: New York Week-19 shock, Wild Card pain and hold risk for NASDAQ:DKNG

The bullish long-term state data sit beside some ugly short-term prints that explain the choppiness in NASDAQ:DKNG over the last few weeks. In New York’s Week 19 online betting numbers, overall market handle fell about 2.0% year on year and revenue collapsed 39.9%, with hold dropping to 6.8% from 11.1% a year earlier. DraftKings underperformed even that weak tape: its handle shrank 5.2% year on year, and revenue plunged 55.7% as hold compressed to 5.0% from 10.6%. A separate set of figures for the NFL Wild Card weekend show gross gaming revenue in New York falling from about $62 million to $37.3 million, a near 40% hit, again driven mainly by adverse outcomes rather than customer exodus.

For equity holders in NASDAQ:DKNG, this is the core risk around each major event: a few weekends of customer-friendly results can erase a quarter’s worth of expected EBITDA. The good news is that these episodes are temporary and symmetric. Quarter to quarter, a “bad” period like Q3 2025, when management estimated unlucky results cost about $300 million of EBITDA, is offset by “good” runs where hold overshoots structural levels. Over a long horizon, the hold normalises; in any single season, it moves the stock hard. Any serious view on DKNG has to accept that volatility and treat it as noise around a structural trend.

Industry template risk: UK regulation, taxation and what it means for NASDAQ:DKNG

The UK online betting market provides the cleanest template for what can go wrong over a decade for NASDAQ:DKNG. After an early start in legalising online sports betting and iGaming, UK-listed gambling groups have spent much of the last ten years fighting successive tax hikes, tighter rules and negative media coverage. Point-of-consumption levies were followed by higher duty rates, remote gaming taxes and severe restrictions on machine stakes and marketing. The end result was an industry that, in many cases, delivered a “lost decade” for equity returns despite solid revenue growth and high customer engagement.

The obvious fear is that the same pattern repeats in the United States, with state governments treating online betting as a fiscal cash machine. There are already early signs. One large state introduced a per-wager tax that immediately knocked back betting volume, three more states have raised rates, and several others are debating similar moves. For NASDAQ:DKNG, that means any valuation that assumes permanently stable tax regimes is fantasy. The realistic scenario is a series of staggered increases across jurisdictions, rather than a single national shock, but the direction of travel on taxation is clearly upwards. The difference versus the UK is that US states move independently and at different speeds, giving operators more room to adjust offers, marketing and product mix state by state.

Business quality and growth levers still available to NASDAQ:DKNG

Even with that regulatory cloud, NASDAQ:DKNG still controls a very valuable underlying business. Between online sports betting and iGaming, the company operates in markets where monthly active payers are still increasing, structural hold is trending higher, and long-run penetration of wallet share remains low. The US remains significantly underpenetrated in legal OSB and iGaming compared with mature markets. More states are likely to legalise sports betting over the next few years; iGaming is only live in a small handful of jurisdictions; and new verticals such as online lottery via acquisitions like Jackpocket add fresh revenue streams that can be pushed through the existing customer-acquisition machine.

Within iGaming, management has been explicit about room to improve product quality, particularly in slots, which carry higher margins than sports betting. Structural hold can continue to rise via better parlay products and personalised pricing. Prediction markets in new states add incremental fee revenue. Generative AI offers a route to automate customer support, content generation and risk management, which directly supports the long-term margin target of around 30% EBITDA versus roughly half that level on an underlying basis today. Even allowing for higher taxes and competition, NASDAQ:DKNG has multiple levers to grow both the top line and unit economics.

Valuation math for NASDAQ:DKNG – EV/Sales, EV/EBITDA and the $60 target

At roughly $32.62–$32.77 per share, NASDAQ:DKNG carries an enterprise value of about $16.85 billion, using a forward revenue estimate of $7.33 billion for FY 2026. That implies a forward EV/Sales multiple of 2.30x, materially below the stock’s three-year median of 4.24x. Historically, the multiple has oscillated around that median, returning to roughly 4.2x multiple times since listing.

If you simply re-rate DraftKings (NASDAQ:DKNG) back to that 4.24x EV/Sales against the same $7.33 billion revenue base, you get an implied enterprise value of about $31.08 billion. Subtracting net debt of roughly $607.67 million leaves equity value around $30.47 billion. Spread across an assumed 510.007 million diluted shares, that equates to a price of about $59.75, which is reasonably rounded to a $60 target. From a starting point of $32.62, that implies roughly 83% upside.

On a cash-flow basis, the picture is more nuanced but still favourable. After adjusting for the $300 million headwind from poor sports results in Q3 and about $50 million of incremental spend on new verticals, the current business could already be producing on the order of $1 billion in EBITDA if it chose to pull back on growth investment. On that “normalised” base, the $18 billion enterprise-value band suggested by recent prices implies a mid-teens EV/EBITDA multiple, which is not aggressive for a market leader with clear growth and margin-expansion paths. Medium term, hitting a structural 30% EBITDA margin on around $6–7 billion of revenue would mean $1.8–2.0 billion of EBITDA. With capex low, that leaves a trajectory toward $1 billion of free cash flow in a reasonable time frame.

Street expectations, profitability timing and market stance on NASDAQ:DKNG

Consensus now expects NASDAQ:DKNG to move into the black on EPS in 2025, with forecasts centred around $0.71 a share. Rating frameworks are split: systematic factor models lean toward Hold, while discretionary analysts as a group skew closer to Buy, and several fundamental shops have reiterated or initiated positive views with targets in the high-30s to mid-40s. One set of work keeps a $37 target despite recent underperformance in New York, another lays out a $39 fair value based on EV/EBITDA trading below its own history, and another sits at $44 after an incremental tailwind from a new iGaming and iPoker legalisation in Maine, the ninth such state. All of those are below the $60 valuation derived from a full return to the three-year median EV/Sales multiple, but they underline the same point: at low-30s, NASDAQ:DKNG is no longer being priced like an obvious bubble.

Investors should also keep an eye on insider behaviour at insider transactions. In a high-growth, high-volatility story, sustained insider selling into strength or meaningful buying into weakness often tells you more than sentiment gauges or quant ratings.

Regulatory and execution risks for NASDAQ:DKNG – what can still go wrong

Three categories of risk sit directly in front of NASDAQ:DKNG holders. The first is event risk around major fixtures. A customer-friendly Super Bowl combined with poor outcomes around conference championships could compress hold sharply in Q1 2026, especially given the incremental volume that DraftKings Predictions is starting to bring in. For a company reporting a quarterly net loss of $256.79 million even before that event, another high-profile “bad quarter” is fully capable of knocking the stock back from the mid-30s into the high-20s on sentiment alone.

The second is regulation around event contracts and college sports. A recent letter from collegiate authorities to federal derivatives regulators urged suspending event contracts on collegiate competitions. If that line of thinking gains momentum, it would blunt some of the near-term growth potential for prediction markets and cut DraftKings off from high-interest college inventory inside DraftKings Predictions. Paradoxically, that could be a net positive if it starves independent event platforms of their best content while pushing users back into OSB in regulated states where DraftKings does not dilute its margins with prediction contracts.

The third is the slow grind of taxation and consumer-protection rules. More states will revisit tax rates, marketing rules and responsible-gaming requirements. That will increase the cost of doing business for NASDAQ:DKNG, and in some states it will force a reset of promotional intensity and headline margins. The UK template proves that regulators can hit the sector repeatedly. The offset is that the US market is fragmented and not all states will move at once, giving operators room to respond. Execution here means constantly rebalancing offers, channels and investment across dozens of jurisdictions, which not every operator can handle. DraftKings has so far shown it can, but the risk never goes away.

Verdict on NASDAQ:DKNG at ~$33 – Buy, Sell or Hold?

Take the full stack of numbers and facts together. The share price around $32.77, a market value near $15.66 billion, forward EV/Sales of 2.30x against a history at 4.24x, a mechanically derived $60 fair value with 83% upside, state-level OSB handles growing double digits with hold mostly rising, an expanding prediction-market footprint in 38 states with sports contracts in 17 and access to 108 million people in California, Texas, Florida and Georgia, a media footprint covering about 73% of national NBA broadcasts plus premium NFL windows, a cash balance of $1.23 billion, improving operating cash flow of $287.48 million and free cash flow of $166.47 million, but also GAAP losses of $256.79 million, volatile hold in weeks like New York’s Week 19 where revenue fell 39.9% and DraftKings’ own receipts slumped 55.7%, regulatory pressure building in taxation and event markets, and an industry template in the UK that warns against complacency.

On that full picture, NASDAQ:DKNG is a BUY with a high-volatility profile and a realistic medium-term target around $55–60, not a momentum trade at any price. At current levels the risk–reward skews favourable: downside toward the high-20s if Super Bowl outcomes and Q1 hold go against the book, upside toward the high-50s if results normalise, prediction markets scale as an additive business rather than a cannibal, and US regulation continues along the current incremental path rather than copying the harshest UK moves. The house does not always win week to week; across a cycle, the odds remain tilted in DraftKings’ favour, and today’s multiple does not fully reflect that.

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