DraftKings (DKNG) Stock Forecast & Price Target

DraftKings has demonstrated notable financial performance, with structural sportsbook hold in the quarter increasing by 80 basis points year-over-year, surpassing company targets. The company's effective cross-sell strategy has successfully integrated multiple products, enhancing customer lifetime value (LTV) and reducing churn, while its revenue guidance for 2025 has been raised by $50 million to a midpoint of $6.45 billion. Additionally, a significant year-over-year increase in Same Game Parlay contributions, particularly in NFL and NBA betting, indicates strong engagement and momentum in DraftKings's offerings.

DraftKings has experienced a significant decline in adjusted EBITDA, dropping by approximately $104 million in the most recent quarter, which raises concerns about the company's financial health. The company faces mounting challenges from rising customer acquisition costs and weaker-than-expected conversion rates, contributing to a slowdown in handle growth from 25% to 15%. Furthermore, medium-term estimates have been slightly adjusted to reflect increased growth in operating expenses, particularly in selling, general, and administrative costs, coupled with lower sales and marketing investments, indicating persistent pressures on profitability.