To The Moon

On Thu, 06 Nov 2025, $DraftKings Inc.(DKNG)$ released its Q3 2025 earnings report.

Its results missed both consensus estimates on revenue and earnings per share.

Despite that, earnings showed resilience and innovation, leading to a sharp rebound in its stock price.

The positive price action was underpinned by (a) investor optimism for DKNG’s new growth initiatives and (b) improving operational metrics.

Below is the skinny.

Q3 2025 Earnings.

DKNG revenue rose +4.4% YoY to $1.14 billion, primarily driven by growth in its (i) sportsbook and (ii) iGaming segments. (see above)

• Sportsbook generated $596 million, and iGaming contributed $451 million respectively.

• These segments continued to expand thanks to strong user engagement, in-game / parlay betting, and expansion into new geographic markets.​

Despite top-line growth, the company still reported a loss per share of -$0.52.

• It was a narrower YoY loss but still above analyst expectations. (see below)

Net loss also improved to $257 million, (down from $294 million YoY) and adjusted EBITDA came in at -$126.5 million, underscoring margin pressure from customer-friendly sports outcomes that dented sportsbook hold rates.

FY 2025.

• As a result, guidance for FY 2025 was revised marginally lower to $5.9 – $6.1 billion,

• The lower guidance still registers a 24% - 28% YOY growth.

Despite these headwinds, operational metrics were encouraging:

• Monthly Unique Payers (MUPs) rose +2% to 3.6 million.

• Average Revenue per MUP increased +3% to $106.

• iGaming revenue surged +25% YoY, acting as a stabilizing force amid sportsbook volatility.

How DKNG Turned Positive?

DKNG’s post-earnings rebound was notable, clawing back from a steep initial loss and surged over +13% after results, even when broader indices fell. (see below)​

As of 13 Nov 2025

Catalysts

Investors appear encouraged by improved (a) operational efficiency, (b) a narrower net loss, and (c) management’s disciplined focus on profitable growth, rather than pure user acquisition.​

• Strategic partnerships: The ESPN deal (effective 01 Dec 2025) positions DKNG as the exclusive sportsbook and odds provider, unlocking massive brand visibility and cross-selling opportunities.

• Strong engagement trends: October sportsbook handle jumped +17% YoY, suggesting Q4 2025 momentum and helped bolster sentiment.

• Capital return strategy: The expanded buyback program reassures shareholders.

• Importantly, analysts maintain a “Strong Buy” consensus, with an average price target of $49.16, suggesting substantial upside of +38.16%.

• Wall Street seems to see DKNG as undervalued given its ability to pivot and diversify. ​

Prediction Market: DKNG’s New Revenue Source?

DKNG is preparing to launch a federally-compliant prediction markets platform known as “DraftKings Predictions”.

• It is slated to debut before end 2025, pending regulatory approvals. ​

• Unlike traditional sports betting, prediction markets allow users to trade contracts on event outcomes — spanning sports, finance, culture, etc…

This potentially unlocks new user segments & revenue streams, especially in states where sportsbook betting isn’t legal.​

So far, DKNG has invested $50 million to build out this segment and is leveraging its existing (a) brand, (b) platform, and (c) user base to cross-promote prediction markets.

Analysts estimate that this move, alongside operational efficiency improvements, could contribute meaningfully to DKNG’ revenue of up to $7.5 billion projected sales by 2026.​

• Regulatory challenges remain but holding a CFTC license positions DKNG strongly for federal-level expansion.​

DKNG’s End 2025 Outlook.

DKNG is expected to see continued revenue growth from sportsbook and iGaming, with a gradual acceleration in prediction market revenues as adoption and product rollouts progress by end 2025.

While regulatory and tax risks (eg. new state tax structures) could pressure EBITDA and profitability, DKNG’s ability to innovate and adapt is drawing renewed investor confidence, suggesting the stock could rebound further in the coming months.​

By pivoting to “prediction markets”, it could unlock significant long-term upside, with investors’ focus firmly remaining on DKNG’s (1) operational discipline and (2) ability to absorb new market risks.

DKNG’s foray into prediction market represent a potentially untapped revenue source. When regulatory hurdles are cleared, DKNG’s prospects will turn bullish immediately, underpinned by analyst conviction and strong internal execution. I am quietly confident of DKNG !

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