Wells Fargo downgraded DraftKings, while Guggenheim and Truist trimmed their price targets.
- Wells Fargo cut DraftKings’ rating and price target, citing ongoing downward revisions in earnings outlook.
- Guggenheim and Truist lowered their DraftKings price targets to $28 and $22, respectively.
- Truist flagged concerns over DraftKings’ prediction markets investments and rising iGaming costs.
DraftKings Inc. (DKNG) is facing mounting Wall Street skepticism after its third-quarter (Q3) earnings miss triggered multiple analyst downgrades and price target cuts. Wells Fargo downgraded the stock to ‘Equal Weight,’ while Guggenheim and Truist trimmed their targets but retained ‘Buy’ ratings. Meanwhile, CFO Alan Ellingson purchased 18,908 shares worth approximately $350,000.
DraftKings stock edged up 0.1% overnight, ahead of Tuesday.
Wells Fargo Turns Cautious On DraftKings
Wells Fargo downgraded DraftKings to ‘Equal Weight’ from ‘Overweight’ and reduced its price target to $21 from $30 following the company’s Q3 report. The firm warned that investors may need to approach the company’s adjusted EBITDA outlook with greater skepticism, pointing to a prolonged pattern of downward earnings estimate adjustments over the past three years.
Repeated cuts to financial guidance could hurt investor confidence. DraftKings may need to deliver stronger results to rebuild trust in its future performance.
DraftKings disappointed investors after reporting weaker-than-expected Q3 results last week and slashing its full-year earnings guidance. Revenue rose 16% from last year to $1.33 billion, missing analysts’ estimate of $1.38 billion, according to Fiscal.ai. Its loss also widened to $0.94 per share, compared with Wall Street’s expected loss of $0.42 per share.
The company lowered its 2026 revenue outlook to $6.35 billion – $6.55 billion from its earlier estimate of $6.5 billion to $6.9 billion. It also slashed its adjusted EBITDA outlook to $175 million to $275 million from $700 million to $900 million. DraftKings expects to invest about $650 million to $700 million in building its prediction markets business.
On Monday, DraftKings CFO Alan Ellingson purchased 8,908 shares at a weighted average price of $18.51 per share, valued at about $350,000.
Guggenheim Cuts DraftKings Estimates, Truist Flags Spending Concerns
Guggenheim analyst Curry Bake also lowered his price target on DraftKings to $28 from $30. However, the firm maintained its ‘Buy’ rating.
Guggenheim reduced its 2026 and 2027 revenue and adjusted EBITDA estimates after considering the latest quarterly results, updated guidance and developments in the prediction markets industry.
Truist cut its DraftKings price target to $22 from $26 but kept its ‘Buy’ rating. The firm cited the company’s weaker-than-expected Q3 results, reduced outlook, and concerns about its prediction-market investments.
Although the company has said its approach to prediction markets relies on proprietary data, investors may remain unconvinced about the potential returns from those investments, Truist said. It also added that higher spending on the company’s core iGaming operations could add pressure to its financial performance.
DKNG Stock: Retail Stance
On Stocktwits, retail sentiment around the stock remained ‘extremely bullish’.
A user said, “The CFO buys stock but the CEO still wont. Jason BUY 1M of the stock on the open market to show conviction. Jesus Christ.”
DKNG stock has crashed 45% year-to-date.
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