What Happened?
Shares of fantasy sports and betting company DraftKings (NASDAQ: DKNG) jumped 4.2% in the pre-market session after BofA Securities upgraded the stock from Neutral to Buy while maintaining a $27 price target, StreetInsider reported.
BofA Securities analyst Shaun Kelley stated that prediction markets represent a win-win scenario, observing that cannibalization risks are lower. Kelley also pointed out that consensus earnings estimates appear to be bottoming out. Furthermore, the analyst noted that the equity's 47% retreat over the previous year creates an attractive risk-reward profile for investors. The upgrade matters because it signals that Wall Street's negative revision cycle may finally be concluding, bolstering market confidence after an extended valuation compression.
The shares were trading at $19.52, up 4.8% from the previous close.
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What Is The Market Telling Us
DraftKings’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock dropped 12.7% on the news that the company issued a disappointing financial outlook for 2026 that fell short of analysts' expectations.
DraftKings projected its 2026 revenue to be $6.7 billion at the midpoint, below the consensus estimate of approximately $7.3 billion. The company also gave a forecast for adjusted EBITDA of $800 million at the midpoint, well under the $980.6 million analysts had anticipated. This weaker-than-expected guidance overshadowed the company's fourth-quarter results. In the quarter, revenue grew 42.8% from the prior year to $1.99 billion, meeting expectations, but its adjusted earnings per share of $0.36 missed the consensus forecast of $0.41.
DraftKings is down 45.3% since the beginning of the year, and at $19.52 per share, it is trading 46.1% below its 52-week high of $36.24 from January 2026. Investors who bought $1,000 worth of DraftKings’s shares 5 years ago would now be looking at only $395.64.
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