Analysts are not letting bad luck impact DraftKings stock, reiterating their positive ratings and confidence in long-term goals.
Last Thursday, DraftKings reported a record $102.6 million in first-quarter adjusted EBITDA on $1.41 billion in revenue. But customer-friendly sports betting results from March Madness, just like in the fourth quarter with NFL results, had a significant impact on earnings.
DraftKings said adjusted EBITDA was $111 million lower than it would have been without that run of favorites. That led to lowering its annual adjusted EBITDA guidance by $100 million at the midpoint, with management saying the forecast would have risen if the results were reversed.
DraftKings stock up despite guidance cut
Like analysts, investors see no reason to back off DKNG because of what the industry hopes is two fluke quarters in a row.
DraftKings stock closed at $37.93 Monday, up 7.3% over Thursday’s closing price before earnings were released.
DKNG volume surged to 24.6 million on Thursday and rose to 27.4 million on Friday, compared to its average of 12 million.
Confidence brings ‘comfort’
Slowing sports betting handle growth, competition from prediction markets and the recent customer-friendly results have investors talking, but the confidence in the commentary from operators like DraftKings and FanDuel parent Flutter gives Barry Jonas of Truist “comfort in the digital operators’ [long-term] growth trajectory,” he said in his post-earnings note.
Jonas adjusted his 2025 estimates to reflect the new midpoint but did not change his 2026 projections, buy rating, or $50 target.
Jeffrey Stantial of Stifel offered a similar read, maintaining his buy and $53 target, though he lowered his 2026 adjusted EBITDA guidance slightly as well. Stantial noted the company’s compelling free cash flow trajectory, tendency to beat estimates and continued execution on product all as reasons why he rates the stock at buy.
Chad Beynon of Macquarie made the biggest changes of the group as he trimmed his adjusted EBITDA forecasts through 2027, which lowered his target to $53. He maintained his outperform rating as DraftKings continues to beat expectations in key areas.
“More importantly, the company’s value drivers are outperforming expectations, product enhancements are driving higher structural hold and promos are deployed more efficiently, all while handle growth outpaced the market in 1Q (+16% vs +11%),” Beynon said.
