# DraftKings cut its profit guide by $575 million to buy a product that earns nothing this year DKNG, Nasdaq. Published November 11, 2026. Price as of the November 10, 2026 regular session close. All figures are in US dollars. Latest reported quarter: July to September 2026, released on November 5, 2026. ## Verdict: HOLD at $19.36 At $19.36 DraftKings trades 25.5% below my Base value of $25.98. The discount is real, but so is the range: the Bear case sits 66% below the price and the Bull case 119% above it. With confidence at C the required margin of safety is 42.5%, so new money waits for $14.94 or less. - Bear value: $6.55 - Base value: $25.98 - Bull value: $42.44 - Upside to base value: +34.2% - Maximum buy price: $14.94 - Required margin of safety: 42.5% - Enterprise value / 2027 guided adjusted EBITDA: 12.2x - Free cash flow, last twelve months (after stock pay): $173 million (-$164 million) - Net debt, September 30, 2026: $1.22 billion - Business quality: 36.25/100 - Valuation score: 65/100 - Confidence: 13.75/25, grade C In February DraftKings guided to $700 million to $900 million of adjusted EBITDA for 2026. On November 5 it guided to $175 million to $275 million. The sportsbook and casino business it calls "core" barely moved, at $875 million to $925 million. The difference is DraftKings Predictions, a new exchange product that will absorb $650 million to $700 million this year and, by the company's own forecast, bring in no material revenue in 2026. The stock fell 21% the next day to $18.51 and closed at $19.36 on November 10, down 46% this year. My Base value is $25.98 a share, the Bear value $6.55 and the Bull value $42.44. That is a cheap price for the Base and an expensive one for the Bear, and the gap between the two is the story. The required margin of safety is 42.5%, so the buy price is $14.94. The verdict is Hold, with new money waiting. Valuation route: US online sports betting and casino operator in an investment year, valued with a two-stage cash flow model of owner free cash flow (adjusted EBITDA minus stock pay, capital spending, lobbying and legal costs, interest and cash taxes), cross-checked with cash flow to 2029 plus an exit at 10 times 2030 adjusted EBITDA after stock pay. Values are present fair-value estimates, not 12-month price targets. ## What DraftKings is DraftKings takes online sports bets in 27 US states, runs online casinos where states allow them, and sells daily fantasy, lottery and, since December 2025, event contracts through DraftKings Predictions. It had 4.1 million monthly paying customers in the third quarter, up 13%, each worth $109 of revenue a month on average. Predictions is a different legal animal. It runs under federal futures rules (DraftKings bought the Railbird exchange in October 2025 and became a futures commission merchant in August 2026), so it can reach customers in states where sports betting is still illegal. Kalshi and Polymarket built that market first. DraftKings is now buying its way in: more than 1.6 million customers have tried Predictions this year, and October gross profit ran at $350 million a year with an 18% promotion rate, by the company's count. Management expects $650 million to $750 million of Predictions revenue in 2027, after an investment of $250 million to $350 million. Its CEO put the conflict plainly at a September conference: if prediction markets "got shut down by the Supreme Court tomorrow, our share price would pop." DraftKings is spending heavily on a product that its own shareholders might prefer did not exist. ## The latest results | $ millions | Q3 2026 | Q3 2025 | 9M 2026 | 9M 2025 | | --- | --- | --- | --- | --- | | Sports (incl. Predictions) | 783.6 | 596.1 | 2,770.1 | 2,475.9 | | iGaming | 460.9 | 451.3 | 1,384.2 | 1,304.4 | | Other | 84.5 | 96.6 | 264.2 | 285.0 | | Revenue | 1,329.1 | 1,144.0 | 4,418.4 | 4,065.3 | | Sports betting volume, $ billions | 13.9 | 11.4 | 41.2 | 36.8 | | Sports net revenue margin | 5.6% | 5.2% | 6.7% | 6.7% | | Adjusted EBITDA | -316.9 | -126.5 | -34.4 | 276.8 | | Stock-based compensation | 86.0 | 72.5 | 233.8 | 236.0 | | Net loss | -468.7 | -256.8 | -515.3 | -132.7 | Revenue grew 16%, about $70 million short of what analysts expected. Sales and marketing jumped 68% to $605.7 million, which the 10-Q attributes mainly to Predictions, the new app, the World Cup and new states. Gaming taxes added $64.4 million to the cost of revenue in the quarter. The third quarter is always the weakest, because the NFL season starts in September and the profit arrives in the fourth quarter: the guide implies about $259 million of adjusted EBITDA in the last three months, after $175 million to $225 million of Predictions spending. Adjusted EBITDA is a generous measure here. It excludes stock pay ($234 million in nine months), $59.1 million of "advocacy and other related legal expenses", which in 2026 means fighting over prediction markets and taxes, and $77.8 million of gains, mainly from buying back convertible notes below face value. I deduct the first two as real costs and agree with removing the gains. ## Owner free cash flow | $ millions | 2024 | 2025 | 9M 2026 | Last 12 months | | --- | --- | --- | --- | --- | | Revenue | 4,767.7 | 6,054.5 | 4,418.4 | 6,407.6 | | Adjusted EBITDA | 181.3 | 620.0 | -34.4 | 308.8 | | Operating cash flow | 417.8 | 662.9 | 63.0 | 383.5 | | Capex and capitalized software | -105.9 | -146.6 | -168.9 | -210.7 | | Free cash flow | 311.9 | 516.3 | -105.9 | 172.8 | | Stock-based compensation | 381.4 | 339.3 | 233.8 | 337.1 | | Owner free cash flow | -69.5 | 177.0 | -339.7 | -164.3 | DraftKings does not publish a free cash flow figure, so I use operating cash flow minus capital spending and capitalized software, then subtract stock-based compensation (SBC, pay in shares instead of cash) to get owner free cash flow. 2025 was the first year it turned positive, at $177 million. The investment year took it back below zero. Cash taxes are almost nil. DraftKings paid $4.5 million in nine months because it carries $4.3 billion of federal tax losses, $3.7 billion of which never expire. I model them explicitly: federal tax only on the 20% of profit that losses cannot shelter, plus state tax, until the pool runs out around 2031, then a full 24% rate. Assuming full tax from day one would cost only $0.66 a share in the Base, because most of the shelter is used late. ## Debt, shares and capital allocation | September 30, 2026, $ millions | Amount | | --- | --- | | Cash and equivalents | 1,100.9 | | Convertible notes, 0%, due March 2028 (converts at about $94.85) | -945.0 | | Term loan B-1, 5.54%, due 2032 | -591.0 | | Term loan B-2, 5.67%, due 2033 | -700.0 | | Lease liabilities | -89.7 | | Net debt used in the bridge | -1,224.8 | | Revolving credit, undrawn | 738.1 | | Liabilities to users less cash reserved for users | -472.8 | Net debt is modest against the $875 million to $925 million the core business should earn this year, and nothing is due before March 2028. In August DraftKings borrowed $700 million and used $300.4 million of it to retire $320 million of the convertible notes. The last line deserves a note: DraftKings owes customers $1.03 billion and holds $557 million of cash reserved for them, so part of the company's own cash stands behind player balances. I keep the standard bridge and show the effect of counting that gap as debt below ($0.94 a share). I use 505.5 million shares: 498.3 million Class A shares outstanding on November 4 plus 7.2 million from options under the treasury method. The 31.6 million unvested restricted stock units are left out because their cost appears as future stock pay, which I deduct; counting them too lowers the Base to $24.45. The 393 million Class B shares belong to CEO Jason Robins, carry 10 votes each and no economic rights, which gives him about 89% of the votes (my arithmetic). DraftKings is a controlled company. Buybacks have been expensive. DraftKings bought 16 million shares for $571.5 million in 2025, about $35.70 each, and 5.5 million for $154.2 million in the first half of 2026, about $28.04, then stopped. The Class A count still rose from 495.1 million to 498.3 million this year. About $1.23 billion of the $2.0 billion authorization is left (my arithmetic). ## Primary valuation: two-stage cash flow model after stock pay DraftKings scores 7 out of 12 on my score for growth companies: strong growth and runway, weak returns on capital and no history of steady free cash flow per share. Its profits are still being built, which a single multiple of today's numbers cannot capture, so the main method is a two-stage DCF, a discounted cash flow model. Stage one runs to 2031 with explicit revenue, adjusted EBITDA margin and stock pay. Stage two fades growth from 7% to 4% by 2036 at a constant margin, then applies 3% terminal growth. The discount rate is 11%, a point above what I use for steadier software, for a regulated business with volatile results and a controlling shareholder. Only fourth quarter 2026 cash flow counts for this year, because the September balance sheet already holds the first nine months. | Base, $ billions | 2027E | 2028E | 2029E | 2030E | 2031E | | --- | --- | --- | --- | --- | --- | | Revenue growth | 17.1% | 12.0% | 10.0% | 9.0% | 8.0% | | Revenue | 7.55 | 8.46 | 9.30 | 10.14 | 10.95 | | Adjusted EBITDA margin | 11.3% | 16.5% | 19.5% | 22.0% | 24.0% | | Stock pay, % of revenue | 5.0% | 4.8% | 4.6% | 4.4% | 4.2% | | Owner free cash flow | 0.12 | 0.59 | 0.95 | 1.31 | 1.65 | 2027 revenue is the midpoint of guidance, $7.55 billion. For adjusted EBITDA I use $850 million, below the $900 million midpoint, because this management has cut its own profit guide in each of the last two years; moving it anywhere inside the range changes the value by less than $0.20. From 2028 the margin rises as Predictions spending turns into revenue and marketing falls back, to 24% in 2031. DraftKings' own long-term target is "at least" 30%; I stop short of it because state gaming taxes keep rising and exchanges now compete for the same bettor without a state license. Capital spending and capitalized software take 2.8% of revenue, lobbying and legal costs 0.8% falling to 0.5%. These are my assumptions, not guidance. Base enterprise value is $14.45 billion, of which the terminal value is 54%. After net debt and 505.5 million shares, the primary Base is **$26.17**. Bear gives $6.48 and Bull $44.84. | Base DCF per share | Terminal growth 2% | 3% | 4% | | --- | --- | --- | --- | | Discount rate 9% | $33.28 | $37.03 | $42.29 | | 10% | $28.22 | $30.81 | $34.27 | | 11% | $24.31 | $26.17 | $28.55 | | 12% | $21.20 | $22.57 | $24.28 | | 13% | $18.67 | $19.71 | $20.97 | The price of $19.36 needs a discount rate of about 14.3% on Base cash flows. The margin path matters more: each 3 points of margin in every year is worth about $5.65 a share. ## Secondary valuation: cash to 2029 plus an exit multiple The second method takes the owner cash flow through 2029 and adds a sale at the end of 2029 at 10 times 2030 adjusted EBITDA after stock pay, all discounted at 11%. Ten times EBITDA after stock pay is about 16 times owner free cash flow once taxes are paid in full: a 6.2% cash yield that, with growth of about 5% a year, returns the 11% I require. The Bear uses 8 times and the Bull also uses 10 times, so the good news in the Bull sits in revenue and margin, not in the multiple as well. | $ billions | Bear | Base | Bull | | --- | --- | --- | --- | | 2030 revenue | 8.46 | 10.14 | 11.18 | | 2030 adjusted EBITDA after stock pay | 0.76 | 1.78 | 2.61 | | Exit multiple | 8x | 10x | 10x | | Exit value at end of 2029 | 6.09 | 17.84 | 26.05 | | Present value of exit | 4.39 | 12.86 | 18.78 | | Present value of cash to 2029 | 0.20 | 1.35 | 2.08 | | Per share | $6.66 | $25.68 | $38.84 | The exit carries 90% of this value over a three-year horizon, more than I like, because the cash flow before 2029 is small while Predictions is being paid for. It is the price of valuing a company in an investment year, and it is why the two methods agree less than the near-identical Base figures suggest: both lean on where the margin lands. | Per share, Base cash to 2029 | 2030 EBITDA margin 15% | 18% | 22% | 26% | | --- | --- | --- | --- | --- | | 7x | $10.97 | $14.00 | $18.05 | $22.10 | | 8x | $12.50 | $15.97 | $20.59 | $25.22 | | 10x | $15.56 | $19.90 | $25.68 | $31.47 | | 12x | $18.63 | $23.83 | $30.77 | $37.71 | | 14x | $21.69 | $27.77 | $35.86 | $43.96 | ## Valuation triangulation | Method | Bear | Base | Bull | Weight | | --- | --- | --- | --- | --- | | Two-stage DCF after stock pay | $6.48 | $26.17 | $44.84 | 60% | | Cash to 2029 plus exit multiple | $6.66 | $25.68 | $38.84 | 40% | | Gap between methods | 2.8% | 1.9% | 15.4% | | | Adopted | $6.55 | $25.98 | $42.44 | | The DCF carries 60% because it holds the full fade and the tax shelter; the exit multiple carries 40% as a check on the terminal value. The Bull gap of 15.4% comes from the DCF letting a 30% margin run for ten more years, which a single exit multiple does not. ## What is the market already pricing in? | Measure at $19.36 | Value | | --- | --- | | Market value of Class A shares, diluted | $9.79 billion | | Enterprise value | $11.01 billion | | Times 2027 guided adjusted EBITDA (midpoint) | 12.2x | | Times 2028 Base adjusted EBITDA after stock pay | 11.1x | | Margin that fits the price, Base growth | 3.55 points below Base every year (20.4% in 2031) | | Or growth, Base margins | 6.5 points a year below Base | | Or discount rate, Base cash flows | 14.3% | The market is not pricing a collapse. It is pricing a DraftKings that ends up with a 20% margin instead of my 24%, which is roughly where the business would land if Predictions keeps costing money and gaming taxes keep rising. That is a reasonable view, and the distance between it and my Base is smaller than the 34% upside makes it look. Options price the next month's swing at about 17% either way (implied volatility 58.2% on November 10). That is high, and a move to my buy price would not need a new piece of bad news. It does not change the value. ## Bear, base and bull scenarios | Case | 2027 revenue / adj. EBITDA, $bn | EBITDA margin 2031 | Stock pay 2031 | Value | Versus price | | --- | --- | --- | --- | --- | --- | | Bear | 7.10 / 0.55 | 15.5% | 5.5% | $6.55 | -66.2% | | Base | 7.55 / 0.85 | 24% | 4.2% | $25.98 | +34.2% | | Bull | 7.75 / 1.00 | 30% | 3.5% | $42.44 | +119.2% | - **Bear:** the core grows at the bottom of its range, Predictions brings in about $400 million instead of $700 million in 2027 and keeps needing promotions, state taxes rise further, growth fades from 7% to 4% by 2031 and the margin stalls at 15.5%. Terminal growth 2%, exit at 8 times. DraftKings survives and earns money; it just never earns enough to justify today's price. - **Base:** 2027 guidance minus a cushion on profit, Predictions turns into a profitable product from 2028, the margin climbs to 24% by 2031. - **Bull:** the top of 2027 guidance, Predictions extends DraftKings into states without legal betting, growth holds at 10% in 2031 and the margin reaches the company's 30% target. The Bear is far below the price because owner cash flow at a 15.5% margin, after stock pay and eventually full tax, is only about 6% of revenue. At that level a $9 billion revenue business is worth little more than its debt allows. | One change at a time, Base $25.98 | Value | | --- | --- | | Adjusted EBITDA margin 3 points lower / higher every year | $20.39 / $31.52 | | Revenue growth 2 points lower / higher every year | $23.77 / $28.33 | | Stock pay 1 point higher / lower | $24.12 / $27.83 | | Discount rate 12% | $23.51 | | Full 24% tax from 2027, no tax losses | $25.32 | | User balances not covered by reserved cash counted as debt | $25.04 | | All unvested stock units added to the share count | $24.45 | | Capital spending 3.5% of revenue | $25.08 | | Fourth quarter 2026 brings no owner cash flow | $25.82 | | 2027 adjusted EBITDA $0.8 / $1.0 billion | $25.90 / $26.20 | | Bought at $19.36, held about 3 years | Return a year | | --- | --- | | Base, exit at 10 times 2030 EBITDA after stock pay | 22.2% | | Base, if today's 11.1x multiple did not change | 26.3% | | Bear | -18.5% | | Bull | 39.1% | DraftKings pays no dividend, so these returns come from the value at the end of 2029 plus owner cash kept in the company, about $3.45 a share by then. In the Base, adjusted EBITDA after stock pay grows from $0.47 billion in 2027 to $1.78 billion in 2030, so the business does the work even if the multiple slips from 11.1 to 10 times. These returns are my arithmetic, not forecasts. ## How the buy price is set The required margin of safety follows the confidence grade, and grade C starts at 42.5%. I add nothing: the Predictions risk, the tax risk and the competition are all in the Bear case, stock pay and lobbying costs are deducted in full, and the controlling shareholder is in the quality and confidence scores. $25.98 times 0.575 is **$14.94**. On the DCF alone it would be $15.05, on the exit multiple alone $14.77. A buy at $19.36 would need a Base value of $33.67, which would take a 28% margin by 2031 or a discount rate below 9%. At $14.94 the enterprise value would be $8.77 billion, 8.9 times 2028 Base adjusted EBITDA after stock pay. | Entry price | Base return a year to end of 2029 | | --- | --- | | $12.00 | 42.4% | | $14.94 | 32.7% | | $17.00 | 27.4% | | $19.36 | 22.2% | | $22.00 | 17.3% | | $25.00 | 12.7% | A 22% expected return looks like a buy on its own. It is not one here, because the same model gives -18.5% a year in the Bear, and the evidence for the Base is still mostly management's 2027 guidance. For an existing holder, the price is below the Base and a hold. I would review a holding above the Bull value of $42.44. ## Dividend and capital return There is no dividend. Capital goes back through buybacks, which stopped after the first half of 2026 while cash went into Predictions and the convertible notes. Neither method credits buybacks separately, because stock pay is already deducted in full. ## Reasons to own DraftKings - **The price fits a weaker business than the Base.** It needs a 2031 margin of only 20.4%. - **The core business still grows.** Guidance puts core adjusted EBITDA at $875 million to $925 million in 2026 and $1.15 billion to $1.25 billion in 2027, on core revenue up 4% to 9%. - **Customers are coming.** Monthly paying customers rose 13% to 4.1 million and betting volume rose 22%, with more than 1.6 million customers trying Predictions this year. - **Predictions could end the state-by-state map.** It reaches customers where sports betting is not legal, and DraftKings expects its gross margin to be higher than the sportsbook's. - **$4.3 billion of federal tax losses.** They shelter most profit for about five years. ## What could go wrong? - **Thesis breaker: Predictions never pays back.** DraftKings expects payback within three years on marketing spend. Kalshi, Polymarket, Robinhood and FanDuel are fighting for the same customer, and FanDuel's US adjusted EBITDA fell to $3 million last quarter. Each 3 points of margin is worth about $5.60 a share of my Base. - **Courts and states.** Class actions in Massachusetts federal court claim Predictions is illegal sports betting in up to fifteen states, and the Seminole Tribe sued in Florida on October 9. A federal ban would hurt the investment but, by the CEO's own account, might help the share price. - **Gaming taxes.** Higher taxes added $64.4 million to costs in the third quarter alone. Guidance assumes today's rates. - **Sport outcomes.** A run of favorites winning can move a quarter's EBITDA by tens of millions; it hit the second quarter by about $80 million of revenue. - **Governance.** One shareholder controls about 89% of the votes, and the board can keep spending on Predictions whatever minority holders think. - **Guidance.** Two years running, the first profit guide was too high. ## Management execution DraftKings started 2025 with adjusted EBITDA guidance of $900 million to $1 billion, cut it in May to $800 million to $900 million and delivered $620 million. It started 2026 at $700 million to $900 million and now guides $175 million to $275 million. Most of the 2026 cut is a choice to spend on Predictions, not a miss in the core, and the 2027 core guide of $1.15 billion to $1.25 billion is above what analysts expected for the whole company before the report. The pattern still matters: profit forecasts from this team have been too high, and buybacks were done at $28 to $36 a share. I score management credibility at 8 out of 20. ## Stock Analyza scorecard | Business quality | Score | | --- | --- | | Franchise and pricing power | 10/20 | | Return on capital over its cost | 0/20 | | Balance sheet and resilience | 7.5/15 | | Cash and earnings quality | 3.75/15 | | Growth and reinvestment runway | 11.25/15 | | Management and capital allocation | 2.5/10 | | Dilution and governance | 1.25/5 | | Total | 36.25/100 | Business quality is low because DraftKings has not yet earned a return on its capital after stock pay, and because the controlling shareholder and the guidance record pull the management and governance scores down. The runway is the strong part: more states, online casino legalization and Predictions in all of them. | Valuation | Score | | --- | --- | | Discount to Base value (25.5%) | 50/50 | | Price against the Bear value (-66.2%) | 0/30 | | What the price implies (below the Base) | 15/20 | | Total | 65/100 | ## Confidence score | Area | Score | | --- | --- | | Historical data and sources | 3.75/5 | | Accounting and ownership (adjusted EBITDA exclusions, user balances, tax losses) | 2.5/5 | | Evidence for the forecast (Predictions unproven, guidance record, litigation) | 1.25/5 | | Model construction | 3.75/5 | | Independent checks (methods share the margin path) | 2.5/5 | | Total | 13.75/25, grade C | ## What I would watch from here ### Green - Fourth quarter 2026 adjusted EBITDA of $260 million or more - Predictions revenue on track for $650 million or more in 2027 - 2027 core adjusted EBITDA guidance kept at $1.15 billion or more - Buybacks resumed below $20 a share ### Yellow - 2027 adjusted EBITDA guidance trimmed but still within $800 million to $1 billion - Predictions promotions above 18% of gross revenue into 2027 - A tax increase in one or two large states ### Red - 2027 adjusted EBITDA guidance below $800 million - Predictions investment above $350 million in 2027 - A court ruling that forces Predictions out of large states - Core adjusted EBITDA below $1.0 billion in 2027 The fourth quarter report, expected in February 2027, is the first test: the guide implies about $259 million of adjusted EBITDA after Predictions spending, the NFL season decides the hold, and management will either confirm or trim the 2027 numbers. A trim below $800 million would move me toward the Bear; Predictions revenue arriving on schedule with lower promotions would lift the confidence grade and could put the stock in the buy zone without the price moving. ## The three most important thesis breakers 1. Predictions keeps needing heavy promotions and never earns back its marketing. 2. State taxes and exchange competition hold the margin near 15%. 3. A court or regulator closes Predictions after the money is spent. ## Stress test and independent check The model was built from the third quarter release, the 10-Q and the 2025 annual report. The DCF, the exit multiple, the triangulation, the buy price, the reverse valuation and the return table were recalculated in a separate script. | Input | Status | | --- | --- | | Revenue, cash flow, stock pay, debt, shares, tax losses, guidance | Q3 2026 release, 10-Q and 2025 annual report, as reported | | Predictions volume, promotion rate, October run rate | Company figures as reported by the trade press | | Free cash flow, owner free cash flow, share count after options | My arithmetic | | Margin path, growth, stock pay, tax timing, discount rate, multiples | My assumptions | | Price | November 10 close, $19.36 | The weakest point is the margin after 2027. Both methods depend on it, and the evidence for it is a guide from a team that has overshot twice. My conservative choices are a 2027 profit below the guide midpoint, a 24% margin against the company's 30% target and deducting lobbying costs; the generous one is letting Predictions turn profitable from 2028. The strongest bull argument is that the price fits a 20% margin. The strongest bear argument is that a 20% margin may be optimistic if exchanges, not sportsbooks, set the price of a bet. ## Final verdict: hold at $19.36 DraftKings is spending about $700 million this year to compete with exchanges that never needed a state license. The market prices that spending as if it buys very little. My Base says it buys more than that, but not with enough certainty to pay $19.36 for it. **Verdict: HOLD at $19.36, watchlist for new money. Base $25.98, 34.2% above the price, Bear $6.55, Bull $42.44, Confidence C (13.75/25). Required margin of safety 42.5%, maximum buy price $14.94, range $14.77 to $15.05 under the two methods.** The buy zone can come to the stock in two ways: the price falls to $14.94, or the 2027 numbers prove the Base and the required margin shrinks. The second would be the better one to wait for. ## More analyses on Patreon This analysis is free. Premium members get every in-depth analysis, the full archive and a vote on which stocks get analyzed next: https://www.patreon.com/stockanalyza ## Sources Primary sources are DraftKings' [third quarter 2026 results](https://www.sec.gov/Archives/edgar/data/0001883685/000188368526000039/q326-prx8kexx991.htm) (November 5, 2026), the [10-Q for the quarter](https://www.sec.gov/Archives/edgar/data/0001883685/000188368526000041/dkng-20260930.htm), the [fourth quarter 2025 results](https://www.sec.gov/Archives/edgar/data/1883685/000188368526000011/q425-prx8kexx991.htm) and the [2025 annual report](https://www.sec.gov/Archives/edgar/data/1883685/000188368526000013/dkng-20251231.htm). The long-term margin target and payback target come from the [March 2026 investor day presentation](https://www.ingame.com/wp-content/uploads/2026/03/DraftKings-2026-Investor-Day-Final.pdf), the February guidance from the [fourth quarter 2025 call](https://www.fool.com/earnings/call-transcripts/2026/02/13/draftkings-dkng-q4-2025-earnings-call-transcript), and the 2025 guidance cut from [PYMNTS](https://www.pymnts.com/?p=2698624). Predictions volume, promotion rate and October run rate are reported by [Covers](https://www.covers.com/industry/draftkings-sports-predictions-success-fuels-q3-revenue-growth-nov-5-2026); the prior 2026 guidance, analyst expectations and the FanDuel and Robinhood figures by [TIKR](https://www.tikr.com/blog/draftkings-sinks-27-as-predictions-spending-cuts-outlook-despite-ceos-call-for-an-exceptional-2027) and [TIKR](https://www.tikr.com/blog/guggenheim-expected-400-million-of-predictions-spending-draftkings-now-plans-up-to-700-million); the CEO's September remarks by [TIKR](https://www.tikr.com/blog/draftkings-ceo-just-admitted-something-most-ceos-never-would). Prices: the November 10 close from [FinancialContent](https://markets.financialcontent.com/stocks/quote?Symbol=nq%3Adkng), the November 5 and 6 closes from [StockAnalysis](https://stockanalysis.com/stocks/dkng/). Implied volatility from [AlphaQuery](https://www.alphaquery.com/stock/DKNG/volatility-option-statistics/30-day/iv-mean) and [Options Analysis Suite](https://www.optionsanalysissuite.com/stocks/dkng/volatility). Broker price targets and ratings are not used. **Disclaimer.** This analysis is provided solely for research and educational purposes. It is not personalized investment, financial, legal or tax advice. Values are estimates, not forecasts or trading instructions. Online gambling stocks can move sharply on regulation, taxes and sport outcomes, and DraftKings carries legal, competitive and governance risks. Investors can lose part or all of their invested capital. Method: Master Investment Analysis Framework v4.3. Approach: two-stage cash flow model of free cash flow after stock-based compensation, lobbying costs and taxes at an 11% discount rate, cross-checked with cash flow to 2029 plus an exit at 10 times 2030 adjusted EBITDA after stock pay. Confidence: C/13.75. Data checks: passed with warnings. Open data gaps: Predictions revenue and margin by quarter, prediction market legal outcome, remaining buyback authorization not stated by the company.