DraftKings Stock Falls After Analysts Lower Q2 Profit Forecasts

Shares of DraftKings (NASDAQ: DKNG) fell 3.8% in morning trading after a wave of Wall Street analysts published bearish revisions to their financial estimates ahead of the company's upcoming second-quarter earnings report.

Wave of Estimate Cuts

The negative sentiment was led by several major investment banks, which expressed concerns over profitability and market conditions in the second quarter. The convergence of these reports just weeks before the August 6 earnings release has rattled investors.

Key analyst actions included:

• Bank of America cut its Q2 adjusted EBITDA estimate to $120 million, which is approximately $53 million below the consensus forecast of $173 million. The bank also reduced its full-year 2026 EBITDA estimate to $625 million from $700 million, citing unfavorable hold rates and investment in prediction markets running above guidance.
• Deutsche Bank slashed its Q2 EBITDA estimate to approximately $140 million, highlighting potential iCasino market share slippage and the mounting cost of prediction market investment as primary concerns.
• Stifel trimmed its price target to $38 from $40, noting that June results were negatively impacted by specific sports outcomes, including the Knicks' NBA championship and losses on World Cup player props.
• Wells Fargo had initiated the revisions on Monday, cutting its price target to $29 from $32, though it maintained an Overweight rating on the stock.

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Market Impact and Context

The sell-off in DraftKings shares occurred amid a relatively flat broader market, with the S&P 500 trading near unchanged and the Nasdaq declining by about 0.5%. This indicates the downward pressure was specific to the company rather than a market-wide trend.

The decline pushes the stock closer to its 52-week low of $20.46 and further from its 52-week high of $48.78. According to the source, the clustering of downward revisions from multiple analysts has created a negative feedback loop, amplifying the day's losses as investors digest concerns over spending, guidance, and volatility in sports outcomes.