DraftKings falls 21% after cutting its 2026 profit outlook to fund its prediction-markets push

DraftKings shares closed at $18.51 on Friday, November 6, down 21.3% on the day, after the company reported third-quarter revenue growth of 16% but cut its 2026 profit guidance sharply. The reason is a bigger bill for its new prediction-markets business. Management now expects to spend $650 million to $700 million on Predictions this year, and 2026 profit guidance fell by roughly $575 million at the midpoint.

The numbers, from the filing

All figures below come from DraftKings' third-quarter earnings release, filed with the SEC as an exhibit to a Form 8-K on November 5.

Metric	Q3 2026	Q3 2025
Revenue	$1,329 million (+16%)	$1,144 million
Sports revenue	$784 million (+31.5%)	$596 million
iGaming revenue	$461 million (+2.1%)	$451 million
Sales and marketing expense	$606 million	$360 million
Adjusted EBITDA	-$317 million	-$126 million
Net loss	-$469 million (-$0.94 a share)	-$257 million (-$0.52)
Monthly unique payers	4.1 million (+13%)	about 3.6 million

Sports consumer volume, which now counts both sportsbook wagers and prediction-market trades, rose 22% to $13.9 billion. Sports net revenue margin was 5.6%, against 5.2% a year earlier. Sales and marketing spending rose about 68% in a quarter where revenue rose 16%, which is where the prediction-market promotions show up. For the first nine months, Adjusted EBITDA is -$34 million, against a positive $277 million in the same period of 2025.

What changed in guidance

In its August release DraftKings was maintaining 2026 revenue guidance of $6.5 billion to $6.9 billion and Adjusted EBITDA of $700 million to $900 million. On November 5 it moved to:

• 2026 revenue: $6.35 billion to $6.55 billion.
• 2026 Adjusted EBITDA: $175 million to $275 million.
• Core business 2026 Adjusted EBITDA: $875 million to $925 million, which the company says reflects more iGaming investment and "modestly customer-friendly" sport outcomes.
• Predictions 2026 Adjusted EBITDA investment: $650 million to $700 million, including $175 million to $225 million in the fourth quarter.

The arithmetic is simple. A core business earning about $900 million at the midpoint, minus roughly $675 million of Predictions spending, leaves about $225 million. The company says Predictions revenue will be "immaterial" in 2026 because new-customer promotions will offset most of the gross revenue it generates.

For 2027 it introduced revenue guidance of $7.35 billion to $7.75 billion and Adjusted EBITDA of $800 million to $1.0 billion. That includes $650 million to $750 million of Predictions revenue and $250 million to $350 million of Predictions investment, with core revenue of $6.7 billion to $7.0 billion and core Adjusted EBITDA of $1.15 billion to $1.25 billion. CEO Jason Robins said the company is "set up for an exceptional 2027," and CFO Alan Ellingson said core free cash flow is funding Predictions "at attractive payback periods."

What the stock did

Nasdaq data shows DKNG closing at $18.51 on Friday, down $5.01 from Thursday. iGaming Business reported the shares fell about 22% in after-hours trading on Thursday and traded at $17.60 around noon Friday, a 12-month low at that point. It also said Wall Street analysts voiced concern about subdued guidance; it did not name them, and we found no consensus estimates in the sources we read, so we do not characterize the results against expectations. The same outlet noted Flutter, FanDuel's parent, missed earnings on November 4 and is down more than 60% over 12 months. The chart above shows DraftKings about 49% below its January 5 peak.

Predictions: the traction and the open legal question

Covers reported that DraftKings Predictions had an annualized volume of $56.8 billion, an 11.1% take rate and an October annualized adjusted gross profit run-rate of $350 million. DraftKings says more than 1.6 million customers have engaged with Predictions this year. Those are company-reported figures and we could not check them independently.

The legal footing is the part the guidance leans on. iGaming Business reported that management's base case is a Supreme Court decision in the first half of 2028, and that under a blanket prohibition by July 2028 the 2026 customer cohort would still be fully paid back while 2027 paybacks would be around 50%. The company's forecasts depend on the regulatory status of event contracts. That fight is live: we covered the Sixth Circuit ruling against Kalshi that opened a circuit split, and the market DraftKings is entering was reshaped by Kalshi's $1 billion raise and the scrutiny of prediction-market volume.

The balance sheet behind the spending

The balance sheet in the release shows cash of $1.10 billion, Term B loans of $1.25 billion (up from $577 million at the end of 2025), convertible notes of $942 million (down from $1.26 billion) and stockholders' equity of $180 million, down from $631 million. The nine-month net loss was $515 million, and treasury stock at cost rose to $1.6 billion from $1.4 billion. It is a company funding a land grab from operating cash flow and debt at the same time.

What to watch

The next data points are the fourth-quarter spend, which the company puts at $175 million to $225 million, any court rulings on event contracts, and whether Predictions revenue starts to outrun promotions in 2027. This is market information, not investment advice.

Sources: DraftKings Form 8-K Exhibit 99.1 (Nov 5, 2026) and Q2 release (Aug 6, 2026) on SEC EDGAR; iGaming Business, Nov 6, 2026; Covers, Nov 5, 2026; Nasdaq.com quote data, Nov 6, 2026. Monthly-payer prior-year figure is our calculation from the reported 13% increase. Some data may be delayed.