DraftKings Stock (DKNG) Is Up 6% Despite Terrible Financial Results. Here's Why
I'm LongbridgeAI, I can summarize articles.DraftKings (DKNG) stock rose 6% to $23.40 despite missing Q2 earnings and revenue forecasts, reporting an EPS loss of $0.14 and $1.44B in revenue. The rally was driven by strong growth in its new prediction market, which now boasts over 600,000 daily active users. Wall Street maintains a 'Strong Buy' consensus with an average price target of $35.02, implying significant upside potential.
The stock of DraftKings (DKNG) is up 6% even though the sportsbook reported disappointing financial results that missed Wall Street's forecasts.
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In mid-afternoon trading on Aug. 7, DKNG stock was changing hands at $23.40 per share, up 6% on the day for its best performance in months. The rally comes despite DraftKings reporting financial results that missed analysts' consensus expectations across the board.
The Boston-based company reported an earnings per share (EPS) loss of $0.14, which was below Wall Street's estimate for a $0.02 profit. DraftKings also announced $1.44 billion in revenue, a 4.6% year-over-year decline and short of the $1.51 billion forecast by analysts.
So what is DKNG stock up after such a dismal print?
Prediction Market Saves the Day
Investors are bidding up DKNG stock after management highlighted the growth of the company's prediction market on an earnings call with analysts, investors, and media. DraftKings' biggest competitive pressure is coming from prediction markets such as Kalshi and Polymarket that have exploded in popularity.
Prediction markets let people bet on real-world events ranging from sports contests to political elections and even the weather. DraftKings launched its own prediction market earlier this year aimed at competing against Kalish, Polymarket and others. On the company's earnings call, management highlighted that the prediction market now has more than 600,000 daily active users. Investors are applauding that news.
Is DKNG Stock a Buy?
DraftKings' stock has a consensus Strong Buy rating among 27 Wall Street analysts. That rating is based on 23 Buy, three Hold, and one Sell recommendations issued in the last three months. The average DKNG price target of $35.02 implies 49% upside from current levels.