DraftKings Stock (DKNG) Rebounds on AI Push and Prediction Markets Approval

As of December 6, 2025, DraftKings Inc. (NASDAQ: DKNG) has quietly staged a comeback. The sports‑betting and iGaming operator’s share price has jumped about 26% over the past month, even though it remains well below its 2025 highs and still carries the scars of a brutal earnings miss and guidance cut. ^[1]

At Friday’s close, DraftKings stock traded around $34.00, down about 3.4% on the day and roughly 35–37% below its 52‑week high near $53.60. ^[2] Over the last twelve months, the shares are still about 20% lower, and long‑term investors are even deeper in the red: one recent analysis pegs DraftKings’ five‑year total return at roughly –37%, making it a net value destroyer so far. ^[3]

Yet the news flow around DKNG in early December is suddenly rich with new catalysts:

Federal approval for a DraftKings Predictions event‑contract platform
A record launch of mobile sports betting in Missouri
A sharper focus on artificial intelligence (AI) to drive the next margin cycle
Fresh institutional buying, ongoing insider selling, and a wall of analyst forecasts that still lean bullish

Here’s a detailed rundown of the latest news, forecasts, and analyses investors are digesting as of December 6, 2025.

Where DraftKings Stock Stands Right Now

Price & performance

Last close: ~$34.00 (Dec 5, 2025), down 3.38% on the day
52‑week range: roughly $26.23 – $53.61 ^[4]
1‑month move: up about 26%
12‑month move: still ~20% lower despite the recent bounce ^[5]
Year‑to‑date: down ~5%, and still over a third below its 52‑week high, according to trading‑pattern analyses. ^[6]

DraftKings remains highly volatile: one recent report notes 22 daily moves greater than 5% over the last year – not unusual for a high‑growth, loss‑making consumer tech stock, but a reminder that DKNG is not for the faint of heart. ^[7]

Balance sheet & valuation snapshot

Recent earnings data collated by MarketBeat show: ^[8]

Market cap: ~$16.9 billion
Debt‑to‑equity: ~2.5x, indicating meaningful leverage
Current ratio: ~1.1, suggesting a reasonably healthy liquidity position
Trailing EPS: about –$0.57 over the last four quarters
Forward P/E: ~53x, reflecting high growth expectations despite current losses

On a price‑to‑sales basis, estimates differ slightly by provider but tell a similar story:

Simply Wall St pegs DraftKings at roughly 3.2x trailing sales, vs. about 1.7x for the median U.S. hospitality‑and‑gaming peer. ^[9]
Zacks’ AI‑focused valuation work suggests DKNG trades around 2.3x forward 12‑month sales, a modest discount to its broader gaming peer group at 2.7x, but still richer than many traditional casino names. ^[10]

In other words, growth is still very much priced in—but the multiple is no longer the nosebleed level it hit earlier in 2025.

Q3 2025: An Ugly Miss That Reset Expectations

The current debate around DraftKings stock starts with its Q3 2025 earnings report, released in early November.

According to MarketBeat’s compiled data: ^[11]

Q3 EPS:–$0.26 vs +$0.01 expected – a $0.27 miss
Revenue:$1.14 billion, up 4.4% year‑over‑year, but well below the $1.40 billion consensus
Net margin: about –4.9%
Return on equity: roughly –22.8%

The weak quarter came after several years of breakneck growth; revenue has risen almost 194% over the last three years and around 19% over the last year, but the pace is clearly slowing. ^[12]

Management also cut its 2025 guidance:

Full‑year 2025 revenue is now guided to $5.9–$6.1 billion, versus a prior consensus of around $6.2 billion. ^[13]
EBITDA expectations were likewise trimmed, as highlighted in a Zacks piece titled “DraftKings Stock Up 26% in a Month: Should You Buy, Sell or Hold?” ^[14]

Zacks notes that the 2025 EPS consensus has been slashed by roughly 40–45% over the past 60 days, reflecting analysts’ response to the Q3 stumble and softer guidance. ^[15]

Adding insult to injury, commentary from multiple outlets pointed to “bettor‑friendly” outcomes in NFL and college sports—favorites winning at unusually high rates—pressuring hold percentages and margins at DraftKings and peers. ^[16]

All of this explains why, heading into late November, DKNG had fallen nearly 30% in three months and why some analysts and commentators described it as a “value destroyer” over the past five years. ^[17]

Prediction Markets: From Competitive Threat to Fresh Catalyst

One of the biggest narrative shifts in the last week comes from prediction markets—a sector that has been both a competitive overhang and a new opportunity for DraftKings.

Federal approvals for DraftKings Predictions

On December 5, 2025, DraftKings received key federal approvals for its upcoming DraftKings Predictions platform:

The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) approved the company’s applications to operate as an introducing broker and swap firm linked to event‑contract trading. ^[18]
These approvals come after DraftKings acquired Railbird, a CFTC‑licensed derivatives exchange, in October 2025 and rebranded its project from “DraftKings Predict” to “DraftKings Predictions.” ^[19]

In practice, DraftKings Predictions is expected to be a mobile app where users trade yes/no event contracts not only on sports, but also on finance, politics, entertainment and other real‑world outcomes. The platform is designed to connect to multiple event‑contract exchanges, potentially leveraging Railbird and other CFTC‑approved venues. ^[20]

From “botched entry” to potential upside

DraftKings’ path into prediction markets has been messy:

It withdrew an earlier NFA application in March 2025 amid regulatory pressure, effectively stepping away from the space for several months. ^[21]
During that hiatus, pure‑play platforms Polymarket and Kalshi, along with Robinhood’s Prediction Markets Hub, raised huge funding rounds and inked partnerships with major sports leagues and financial data providers—putting traditional sportsbooks like DraftKings and Flutter on “high alert.” ^[22]

A detailed Stocktwits/ Fortune analysis notes that: ^[23]

Kalshi recently raised funding at an $11 billion valuation,
Polymarket secured a multi‑billion‑dollar investment from ICE, owner of the NYSE,
Robinhood’s prediction‑market hub has become one of its fastest‑growing revenue lines.

Against that backdrop, DraftKings and Flutter have insisted that sportsbooks and prediction markets are complementary, not cannibalistic, but investors have still punished the stocks amid worries that upstart exchanges could siphon off user engagement and wallet share. ^[24]

Now, sentiment may be turning. The Motley Fool, citing Macquarie research, recently pointed out that prediction markets could represent a $5 billion total addressable market for DraftKings and FanDuel, with $4.4 billion of that tied to sports contracts and as much as $176 million in incremental EBITDA for DraftKings three years out if execution is strong. ^[25]

In other words, the same narrative that hurt DKNG in 2024–2025—“prediction markets are killing sportsbooks”—is evolving into a potential growth story now that DraftKings has federal approvals and a clear product path.

Missouri Launch and a Nation‑Leading State Footprint

Regulation is not just about risk; for DraftKings it’s also a growth engine.

A comprehensive update on DraftKings legal states published on December 4 reports that: ^[26]

DraftKings now operates its online sportsbook in 26 U.S. states plus Washington, D.C., more than any other operator.
It holds around 34% U.S. online sportsbook market share, second only to FanDuel’s 38%.
Its online casino is live in five states (NJ, PA, MI, WV, CT), and its DFS product is available in most of the country.
On December 1, 2025, DraftKings launched mobile sports betting in Missouri, after securing a license from the Missouri Gaming Commission.

Missouri’s launch is already drawing headlines:

Within the first 24 hours of legalization on December 1, the state recorded over 250,000 active sportsbook accounts and more than 2.6 million geolocation checks, making it one of the most successful sports‑betting debuts in U.S. history. ^[27]
DraftKings was among eight major operators live on day one, alongside FanDuel, BetMGM, Caesars and others. ^[28]

Missouri had been a flashpoint earlier in November, with reports of possible delays due to regulatory uncertainty. But the December 1 go‑live and record activity show that, for now, DraftKings is still able to convert lobbying efforts and licensing wins into real revenue opportunities.

The same Sharp Football analysis notes that with 26 live states plus D.C., DraftKings may next target Georgia or Oklahoma for expansion, though no concrete timeline exists. ^[29]

AI as DraftKings’ Next Margin Engine

Another major theme in the latest research is DraftKings’ aggressive push into AI and automation.

A December 1 Zacks article, published via Nasdaq, highlights that: ^[30]

Management has identified AI as one of the few areas where spending will actually increase heading into 2026.
In its Q3 call, DraftKings indicated that most mature online sports betting (OSB) and iGaming states will require “little to no additional” marketing or operational investment next year, freeing up resources.
AI initiatives are expected to begin generating cost reductions as early as 2026, with a “long tail” of additional efficiency and revenue benefits over time.

DraftKings is looking at AI across a range of functions:

Personalized marketing and customer retention
Risk and trading (pricing odds more efficiently and dynamically)
Fraud detection and responsible‑gaming monitoring
Operational automation in customer support and back‑office processes

However, Zacks also notes that despite the AI narrative, the stock has dropped about 30.8% over the past three months, and 2026 EPS estimates have been revised down from about $2.06 to $1.54 (roughly –25%) over the last 30 days. ^[31]

That combination—strong long‑term upside from AI, but falling near‑term earnings forecasts—explains why Zacks currently assigns DraftKings its lowest rating, Rank #5 (Strong Sell), even as other firms remain bullish. ^[32]

Institutional Buying vs. Insider Selling

Fresh on December 6, MarketBeat reported that Ardmore Road Asset Management LP boosted its position in DraftKings by 41.7%, purchasing 250,000 additional shares in the second quarter to reach 850,000 shares, worth about $36.5 million and representing roughly 0.10% of the company. DKNG now makes up around 3% of Ardmore’s portfolio and is its 13th‑largest holding. ^[33]

At the same time, company insiders have been net sellers:

CFO Alan Wayne Ellingson sold 8,421 shares at an average price around $29.23 in mid‑November.
Insider R. Stanton Dodge sold 52,777 shares at roughly $33.84 in early December.
In total, insiders have sold 166,752 shares worth about $5.39 million over the last quarter, though insiders still control just over 51% of outstanding shares. ^[34]

Institutional ownership stands near 38%, suggesting a stock that is heavily owned by both insiders and professional investors, with relatively less float in purely retail hands—one factor contributing to its sharp swings. ^[35]

What Wall Street Analysts Are Saying Now

Despite the Q3 miss and guidance cut, sell‑side sentiment is still broadly positive, though notably less euphoric than earlier in 2025.

Consensus ratings and price targets

A fresh MarketBeat rating summary dated December 6 shows: ^[36]

32 brokerages currently cover DKNG.
25 rate it “Buy,” 5 “Hold,” and 2 “Sell.”
The average 12‑month price target is about $47.48, implying roughly 40% upside from the ~$34 share price.
Targets range from the low $30s to the low $60s, with several firms trimming their targets into the low‑$40s after Q3.

Other aggregators paint a similar picture:

StockAnalysis cites 28 analysts with a “Strong Buy” consensus, and an average target near $47.82 (range: $31–$63). ^[37]
A Benzinga forecast roundup puts the average target slightly higher, at about $48.69, with a high of $63 and a low around $30–31. ^[38]
TradingView’s compiled forecasts show a wider range, with max estimates reaching $73 and low estimates near $30—a sign of substantial disagreement about long‑term upside. ^[39]

Recent individual calls

Over the last few weeks, several notable ratings have hit the tape:

BTIG has a Buy rating and raised its target from $42 to $45 on December 5, citing a constructive long‑term outlook despite recent volatility. ^[40]
Needham has repeatedly reiterated a Buy with a $52 target, while Mizuho and Bernstein cut their targets but kept Outperform ratings (to $46 and $41, respectively). ^[41]
Wells Fargo recently initiated coverage with an Equal‑Weight rating and a more cautious $31 price target. ^[42]
JPMorgan cut its target from $51 to $42, but kept an Overweight rating and even added DraftKings to a best‑ideas‑style list, arguing that the market may be overreacting to prediction‑market headlines and one bad NFL season. ^[43]

Put simply: Wall Street’s base case still assumes DKNG will work out, but the spread of price targets has widened and some firms are clearly in “show me” mode after Q3.

Earnings forecasts

Analyst models still point to steep earnings improvement, even after recent cuts:

MarketBeat’s data suggest consensus EPS could climb from a small profit in 2025 to more than double in 2026, implying triple‑digit percentage growth off a low base. ^[44]
Zacks, however, underscores that estimate revisions are trending down, with its 2026 EPS forecast cut by about 25% over the last month, and its ranking on the stock at Strong Sell (Rank #5). ^[45]

This tension—rosy long‑term numbers, but softening near‑term estimates—is central to how investors are interpreting the stock right now.

Valuation Check: Is Growth Still Justifying the Multiple?

A widely shared Simply Wall St piece from December 5 argues that DraftKings’ price‑to‑sales ratio near 3.2x is elevated but not outrageous given its growth profile: ^[46]

Revenue grew 19% last year and nearly tripled over three years.
Consensus forecasts call for about 21% annual revenue growth over the next three years, versus roughly 14% for the broader industry.

From this lens, paying a premium multiple might be rational if DraftKings:

Keeps growing faster than its peers, and
Successfully translates that growth into sustainable profitability.

Other analysts caution that even at a somewhat lower forward P/S of ~2.3x, DKNG still trades above land‑based casinos and many slower‑growth online operators. With a forward P/E over 50x, the stock bakes in years of margin expansion—a tricky proposition in a business facing heavier taxes, intense competition, and volatile hold percentages. ^[47]

Key Risks Investors Are Watching

Recent commentary—and DraftKings’ share price path in 2025—highlights several risk factors that remain very much in play.

1. Regulatory and tax pressure

The Motley Fool/Finviz article bluntly points out that DraftKings and its peers are being hit by a “hostile tax environment”:

Since early 2024, several states have enacted higher sports‑betting taxes, often in ways that disproportionately impact large operators like DraftKings and FanDuel.
Illinois, for example, shifted to a graduated tax structure and added a per‑bet levy that escalates with volume, directly compressing margins for high‑handle books. ^[48]

Prediction markets bring their own regulatory risk. DraftKings has already paused and re‑filed NFA applications once, and regulators have shown a willingness to crack down on event‑contract products they view as too close to unregistered securities or off‑book gambling. ^[49]

2. Sports outcomes and margin volatility

Two consecutive seasons of bettor‑friendly NFL results and an unusually high win rate for favorites in March Madness have shown how random sports outcomes can dent hold percentages, even when customer engagement is strong. ^[50]

This kind of variance cuts both ways—good seasons can drive windfall profits—but it means DraftKings’ quarterly earnings will likely remain lumpy.

3. Disruption from prediction markets and new formats

Prediction‑market platforms like Kalshi and Polymarket, plus new offerings from Robinhood, are not just curiosities anymore. They:

Attract younger, more trading‑savvy users
Offer markets on politics, macro, culture, and other topics sportsbooks usually can’t touch
Are increasingly moving into sports‑adjacent products, including markets that resemble same‑game parlays and player props ^[51]

If DraftKings’ Predictions app fails to gain traction or proves less profitable than a traditional sportsbook, investors could see it as yet another expensive side bet.

4. Persistent losses and leverage

Despite strong revenue growth, DraftKings still reports negative net income (about –$507 million over the last four quarters) and negative EPS. It also carries meaningful debt (debt‑to‑equity ~2.5x), which magnifies both upside and downside as rates remain relatively high. ^[52]

The company is moving toward profitability, but the timeline and sustainability of that profitability remain open questions.

5. Extreme share‑price volatility

As noted earlier, DKNG has registered more than 20 daily moves above 5% over the past year, and sentiment has swung wildly—from “AI‑ and iGaming‑powered growth story” to “is DraftKings dead?” and back again within a few months. ^[53]

For investors, that means position sizing and risk management are crucial.

The Bull vs. Bear Case After December 6, 2025

The bull case

Bulls, including many on Wall Street, argue that:

DraftKings is entrenched as a top‑two U.S. online sportsbook with the widest state footprint and strong brand recognition. ^[54]
Prediction markets, AI and iGaming provide new revenue streams and margin levers that could kick in from 2026 onward. ^[55]
Consensus forecasts still call for low‑20s % annual revenue growth and triple‑digit EPS growth over the next couple of years, off a low base. ^[56]
Even after the recent bounce, DKNG trades well below its 2025 highs and at valuation levels that look more reasonable than earlier in the year. ^[57]

Some recent commentary has gone so far as to label DraftKings one of a handful of “easy wealth builders” for long‑term investors willing to ride out volatility, though many of those pieces also stress diversification and patience. ^[58]

The bear case

Bears counter that:

DraftKings has destroyed shareholder value since going public, with a roughly –37% total return over five years, even as U.S. sports betting exploded. ^[59]
The company is still losing money, employing heavy leverage, and facing rising taxes, intense competition and regulatory uncertainty. ^[60]
EPS forecasts have been cut repeatedly in recent months, and at least one major research house (Zacks) now rates the stock a Strong Sell on the basis of downward estimate revisions and weak price momentum. ^[61]
Prediction markets and AI, while promising, could take years to materially impact the bottom line, and there is no guarantee that DraftKings will emerge as a winner in those arenas. ^[62]

In short, skeptics see DKNG as a high‑beta, richly valued name in a tough regulatory and competitive environment, one that may require perfect execution to justify its current multiples.

Bottom Line: What to Watch Next

For investors following DraftKings after December 6, 2025, the key watch‑items are clear:

DraftKings Predictions launch timing and traction
- When does the app go live?
- Does user engagement justify the hype, and are economics comparable to or better than sports betting?
Evidence of AI‑driven margin improvement in 2026
- Look for lower marketing spend as a % of revenue, better operating leverage, and clearer disclosure on AI use cases and cost savings. ^[63]
Missouri and new‑state performance
- Early handle and revenue numbers from Missouri will show whether its blockbuster launch can translate into sustained share and profits. ^[64]
Tax and regulatory developments
- Any new state tax hikes on sports betting or federal moves around prediction markets could shift the risk/reward calculus quickly. ^[65]
Q4 2025 and 2026 guidance updates
- The next earnings call—currently expected around February 12, 2026—will be a key moment for management to rebuild credibility after the Q3 miss. ^[66]

DraftKings remains a controversial, high‑risk growth stock. The latest news—federal approvals for its prediction‑market app, a strong Missouri launch, and an AI‑heavy investment plan—has re‑ignited bullish hopes, but the stock’s history and current fundamentals ensure that debate over DKNG is far from settled.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, investment recommendation, or an offer to buy or sell any securities. Always do your own research and consider your financial situation and risk tolerance before making investment decisions.

References

DraftKings Stock (DKNG) Rebounds on AI Push and Prediction Markets Approval – Is the Rally Just Getting Started?