$DKNG · Parkev Tatevosian, CFA · 2026-11-02

DraftKings' stock fell by more than 40% in 2026, as competition with forecasting marketplaces such as Polymarket and Kalshi eroded its market share, forcing the company to increase its investments to regain its lost position.

Prior to the proliferation of prediction markets, DraftKings had achieved excellent success in obtaining the necessary approvals from each state to operate its sports betting markets, and to a lesser extent, its online (iGaming) betting markets.

DraftKings launched its own products for the forecasting markets and began to regain its market share, and the management team highlighted how surprised they were by the speed with which their offerings in this area gained significant momentum.

However, investors are no longer as enthusiastic about DraftKings as they were before competition spread in this sector. Now, investors are asking me if the drop in DraftKings' stock represents a buying opportunity, and I wanted to review this business and answer that question again.

We can see the impact of forecast market competition on DraftKings' revenues if we look at a long-term chart. You can see that from 2020 to 2026, the business was booming, with revenues growing from 500 million to 6 billion in a relatively short time.

However, DraftKings' growth stalled and its revenue fell from its peak over the past twelve months to $ 6.2 billion. In addition, the ratio of operating cash flow to sales has been improving significantly since 2022, and even the growth of this indicator has slowed.

Management was forced to change its business strategy and expand into forecasting markets, a category it had not originally planned to enter.

She had her own plans for growth and development, working state after state to gain approval to offer her sports products, and was gaining momentum in this regard. As for the online gambling (iGaming) aspect of its business, it was in a state of stagnation.

The company only received approvals in five states , but it was following a slow and steady approach, state by state, jurisdiction by jurisdiction. The proliferation of forecast markets has created a situation in which management has had to take a step back and say, "Well, we need to rethink our plans now."

Things have changed dramatically, so they needed a strategic shift.

Overall, I think they did a relatively good job of adapting to changing circumstances. This was not their primary approach to the market, but as a secondary approach, they dealt with it effectively.

If the industry’s regulations change , and if the incoming administration is stricter about the spread of these markets, DraftKings will have a stronger competitive position if we go back to what this industry was like before the prediction markets gained momentum.

When I talk about investors' feelings turning negative towards DraftKings, you can see that in the company's price-to-earnings-forward ratio. You can see that in the price action in 2026.

Given the forward price-to-earnings ratio of 12, this is close to the lowest trading level for this stock according to this valuation metric over several years. The company is trading at a valuation that essentially assumes no growth over the next several years.

So , at the moment, what is being priced in at DraftKings is that it will lose its competitiveness in the forecasting markets, it will lose market share, and its revenues will continue to decline on a twelve-month basis.

However, I don't think that will be the case . I believe that DraftKings has provided competition, a competitive product that is gaining market share.

Existing customers are integrating this product, which involves less risk with regard to regulatory changes compared to forecasting market firms that could actually go out of business if a stricter regulatory environment returns.

Today, I also updated my discounted cash flow assessment for DraftKings and concluded that the company is worth approximately $31 per share . You can buy this stock for just over $20, indicating a significant drop in value here as the stock price is approaching its lowest level in 52 weeks.

Therefore, I have rated this stock as a buying opportunity. It was one of my worst-performing picks here in 2026.

I last updated this review on August 7, and today I reaffirm my belief that it represents a buying opportunity here. However, having said that, I'm beginning to lose confidence in the company's ability to execute this plan in the near term.

It appears it will take longer for the company to convince investors that it will maintain its market share and continue to grow its business in the long term.