Share 
This image was created entirely by AI with guidance from our editorial team.
JPMorgan, UBS and Stifel downgraded DraftKings after the company lowered its 2026 outlook and said its prediction markets business could generate between $900 million and $1.05 billion in combined adjusted EBITDA losses through 2027, according to Yogonet. Stifel said California and Texas account for nearly half of DraftKings’ serviceable prediction market.
DraftKings shares fell 21.3% on Friday to a new 52-week low.
Downgrades and a lower outlook
Stifel cut DraftKings to Hold from Buy and lowered its price target to $21 from $32. JPMorgan moved to Neutral from Overweight, cut its target to $21 from $30 and removed the company from its Analyst Focus List. UBS downgraded the stock to Neutral from Buy and reduced its target to $22 from $48.
DraftKings lowered its 2026 core revenue guidance to $6.35 billion-$6.55 billion from $6.5 billion-$6.9 billion. It cut its adjusted EBITDA forecast to $175 million-$275 million from $700 million-$900 million.
CEO Jason Robins said 60% of the roughly $100 million reduction in core adjusted EBITDA guidance was due to unfavorable sports results. He tied the rest to increased online casino customer acquisition spending.
JPMorgan said DraftKings’ 2027 core earnings forecast implies about 75% incremental adjusted EBITDA flow-through, compared with a historical rate of 30%-40%.
Analysts weigh the prediction markets bet
DraftKings said it acquired about 1 million prediction market customers in three months, and more than 1.6 million have engaged with the offering this year.
Stifel analyst Jeffrey Stantial wrote: "Bottom-line, DKNG becomes a show-me story and we think it will take several quarters for sentiment to improve regardless of PM legal outcome."
UBS analyst Robin Farley said: "We believe it is difficult to place meaningful value on the prediction markets business given uncertain regulatory outlook."
Deutsche Bank’s Steven Pizzella said: "Volume increasingly appears real; the debate is now what that volume is ultimately worth and how much stays with DKNG."
Citizens JMP analyst Jordan Bender compared the spending to DraftKings’ sportsbook expansion in 2022: "This feels like that moment again."
Robins defended the strategy: "Our recent performance reinforces our belief that we are in a win-win position no matter how any future court ruling plays out."
DraftKings expects its 2026 prediction market customers to have paid for themselves by a potential Supreme Court ruling by mid-2028. If sports contracts remain permitted, it expects those customers to generate more than $1 billion in gross profit in 2028.
If you or someone you know has a gambling problem, call the California Problem Gambling Helpline at 1-800-GAMBLER (1-800-426-2537), 24/7.
More from playca.com – Utah sues Kalshi as founder raises prospect of Supreme Court fight – Becerra Win Could Help California Tribes’ 2028 Sports Betting Effort – Billy Walters says prediction markets would have made him far richer as DraftKings flags pro-heavy activity
—
Source: As reported by Yogonet.
