Core Insights - Walt Disney Co. has signed a new multiyear deal with DraftKings Inc. to become the official betting site and odds provider for ESPN sports networks, replacing its previous partnership with Penn Entertainment Inc. [1] - The new agreement allows players to access DraftKings' sportsbook and daily fantasy contests through ESPN platforms starting December 1 [1] - Disney and Penn ended their 10-year $2 billion agreement due to a lack of significant market share capture in the sports betting sector [2] Group 1 - DraftKings' shares increased by 8.5% in early trading, while Penn's shares rose by 9.2%, indicating positive market reactions to the new deal [2] - The sports betting market, valued at $13.7 billion, is primarily dominated by DraftKings and FanDuel, with ESPN Bet struggling to gain traction [3][4] - ESPN Bet, which holds less than 3% of the mobile sports-betting market, will continue to be used for ESPN programming despite its low market share [4] Group 2 - Penn Entertainment will launch sports betting in the US under theScore Bet brand starting December 1, following the end of its partnership with Disney [4]

Core Viewpoint - DraftKings Inc is expected to provide insights on its competition with prediction markets and its recent acquisition during the upcoming third-quarter financial results announcement Financial Performance - Analysts estimate DraftKings will report third-quarter revenue of $1.23 billion, an increase from $1.09 billion in the same quarter last year [2] - The company is projected to report a loss of 40 cents per share, compared to a loss of 17 cents per share in the previous year's third quarter [3] - DraftKings has beaten revenue estimates in five of the last ten quarters and earnings per share estimates in nine of the last ten quarters [2][3] Analyst Ratings and Market Sentiment - Bank of America Securities analyst Shaun C. Kelley downgraded DraftKings from Buy to Neutral, lowering the price target from $48 to $35, citing challenges from prediction markets and other headwinds [4] - Other analysts have maintained their ratings but adjusted price targets downward, with BMO Capital lowering from $65 to $63 and Bernstein from $55 to $50 [7] Key Items to Watch - The discussion on prediction markets is anticipated to be a focal point during the earnings call, especially regarding the acquisition of Railbird Technologies [6][8] - The launch of a mobile app for event contracts, DraftKings Predictions, is expected to be highlighted, with investors looking for details on revenue opportunities [8] Industry Context - The American Gaming Association predicts $30 billion will be wagered on the 2025 NFL season, representing an 8.5% year-over-year increase, with DraftKings positioned as a major beneficiary [11] - The third quarter results may reflect the impact of unfavorable sports outcomes, particularly with many favorites winning, which could affect financial performance [11][12] Stock Performance - DraftKings stock closed down 2.41% to $27.92, reaching a new 52-week low of $27.89, and is down 23.1% year-to-date [13]

DraftKings Inc (NASDAQ:DKNG) just hit a Death Cross — and its billionaire backers are feeling the chill. DraftKings stock has tumbled nearly 20% in a month, just as the sports-betting giant prepares to report its third-quarter earnings on Thursday after the close. For investors like Ken Griffin and Cliff Asness, who loaded up on the stock earlier this year, the timing couldn't be worse.Track DKNG stock here.The Billionaires' Bad BeatCitadel's Griffin added big to his DraftKings position in the second quarte ...

Core Insights - The company is focusing on an "AI-first" strategy to enhance speed, efficiency, and scale across its operations [1] - Despite revenue growth, the number of unique users on DraftKings' platform remained flat from Q1 to Q2, indicating potential challenges in user acquisition [2] - DraftKings reported nearly $4.8 billion in revenue for 2024, a 30% increase from the previous year, and is expected to achieve profitability in 2025 [3] Financial Performance - DraftKings' marketing spending in Q2 was $233 million, an 8% increase year-over-year, while revenue growth was 37%, suggesting effective marketing investment [1] - The company is projected to generate Q3 revenue between $1.24 billion and $1.40 billion, reflecting an 11% year-over-year increase, but may report a per-share loss of approximately $0.27 [8] Market Position and Competition - The stock has declined nearly 50% from its 52-week high due to competition from event-betting platforms like Kalshi and Polymarket [5] - The acquisition of Railbird is seen as a strategic move to counter competition in the sports-wagering space [10] - DraftKings maintains strong brand recognition and relationships with media companies and sports leagues, which may provide a competitive edge against new entrants [12] Future Expectations - Analysts expect continued revenue and earnings growth, although there may be missed earnings estimates in the short term [6][7] - The bearish sentiment surrounding DraftKings is believed to be nearing its end, with the upcoming earnings report seen as a potential catalyst for recovery [13]

Core Viewpoint - The stock ratings for DraftKings Inc. and Flutter Entertainment Plc have been unexpectedly downgraded by Bank of America due to multiple risks facing the sports betting market, including the rise of prediction markets like Polymarket, which may overshadow traditional operators [1][2]. Group 1: Stock Downgrade and Market Impact - Bank of America analysts led by Shaun Kelley downgraded the stock ratings of DraftKings and Flutter from "Buy" to "Neutral," citing concerns over structural hold earnings and significant pressure from taxation [1][2]. - Following the downgrade, DraftKings' stock fell by 6.4%, reaching its lowest level in over two years, while Flutter's stock dropped by 3.9% [6]. Group 2: Rise of Prediction Markets - Prediction markets, such as Kalshi Inc. and Polymarket, are gaining popularity among bettors, allowing them to place paid bets on various significant events, which poses a threat to traditional sports betting operators [2][6]. - The capital markets have become highly sensitive to the emergence of paid prediction markets, leading to long-term pressure on the valuations and business models of traditional betting companies [2]. Group 3: Future Risks and Legal Environment - Analysts express concerns about substantial risks ahead, including the launch of significant features by Polymarket in the U.S. and new funding rounds for Kalshi, alongside competition from traditional finance and cryptocurrency entrants [7]. - The current legal environment complicates the assessment of risk-return profiles for companies like DraftKings and Flutter, as state regulators appear to be limiting traditional operators, potentially benefiting disruptors and new entrants [8].

Core Viewpoint - October was a challenging month for DraftKings, with shares dropping 12.32% to close at $30.59, marking the lowest end-of-day price since August 2024 [1] Group 1: Market Dynamics - The decline in DraftKings' stock can be attributed to increased volume in prediction markets, which investors perceived as competitive threats to DraftKings' offerings [2] - Favorable NFL outcomes for bettors during September negatively impacted DraftKings' margins and profitability, leading analysts to lower quarterly estimates [3] Group 2: Earnings Outlook - The struggles experienced in the NFL season are likely already reflected in DraftKings' stock price, suggesting that the upcoming third-quarter earnings report could provide a basis for a potential rebound [4] - Historically, DraftKings has a pattern of raising guidance, but it has also revised forecasts downward due to favorable outcomes for bettors [5] Group 3: Future Expectations - There is pressure on DraftKings and similar companies to demonstrate improved performance in the current quarter, particularly regarding football betting [6] - The company may have an opportunity to reassure investors by reporting that bettors performed poorly in October and by adopting a conservative approach to promotional spending with the upcoming launch of online sports wagering in Missouri [9]

Group 1 - Bank of America downgraded DraftKings and Flutter Entertainment due to a combination of declining margins and potential new taxes on betting companies in the U.S. and U.K. [1] - The situation has been described as a "perfect storm" by analysts, indicating multiple headwinds affecting the companies simultaneously [1]. - Wall Street is increasingly engaging in prediction markets, with platforms like Robinhood, Polymarket, and Kalshi gaining traction in event wagering [2]. Group 2 - NYSE's parent company plans to invest $2 billion in Polymarket, indicating a significant interest in the prediction market space [4]. - Cathie Wood has shown fluctuating investment behavior with DraftKings, initially loading up on shares but later unloading them as the NFL season prompted a target raise [4]. - DraftKings and its competitors, including Flutter and Las Vegas Sands, are facing challenges as their stock performance is threatened by results that have caused them to slide from buy zones [4].

Core Insights - DraftKings Inc. (DKNG) is set to report its third-quarter 2025 results on November 6, with expectations of a revenue increase but potential earnings pressure due to various factors [1][10]. Financial Estimates - The Zacks Consensus Estimate for DKNG's third-quarter adjusted loss per share has widened to 14 cents from 2 cents over the past month, compared to an adjusted loss of 60 cents in the same quarter last year [2]. - Revenue expectations are pegged at $1.24 billion, reflecting a 13.3% year-over-year increase [2][10]. Revenue Drivers - The anticipated revenue growth is attributed to ongoing product innovation, strong user engagement, and DKNG's leadership in online sports betting and iGaming [3]. - Live betting continues to be a significant growth driver, supported by industry-leading uptime and a variety of in-game wagering options, particularly during major sports seasons [4]. - DKNG's expansion into new jurisdictions, such as the mobile sportsbook launch in Missouri, is expected to contribute positively to revenue [5]. Cost Pressures - The company's bottom line may face pressure from rising tax burdens in key states, expansion-related expenses, and elevated marketing investments during the peak football season [6][10]. - New tax pass-through mechanisms and regulatory developments could also create temporary margin friction [7]. Earnings Prediction - Current models do not predict an earnings beat for DKNG, with an Earnings ESP of -100.00% and a Zacks Rank of 4 (Sell) [8][9].

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Core Viewpoint - DraftKings and Flutter Entertainment stocks have been downgraded by BofA Securities due to profit volatility and tax risks, with price targets lowered significantly [3][6][9]. Company Performance - DraftKings' stock fell 3.7% to $29.44, while Flutter's shares dropped 3.4% to $223.22, both experiencing double-digit declines in 2025 [4][6]. - The investment bank has lowered DraftKings' price target from $48 to $35 and Flutter's from $325 to $250 [3][6]. Market Competition - The rise of prediction markets, such as Kalshi, poses a competitive threat to traditional sports betting platforms like DraftKings and FanDuel [5][10]. - Prediction markets operate under different regulations, which may undermine the business models of established sportsbooks [5][11]. Financial Projections - BofA projects that hold volatility during the football season will reduce DraftKings' EBITDA by $150 million and Flutter's by $100 million per quarter [6][8]. - The firm anticipates ongoing pressure from increasing state gaming taxes in the U.S. and potential higher taxes in the U.K. for Flutter, impacting profit margins [9][10]. Analyst Sentiment - Despite the downgrades, some analysts believe that both companies can recover, with over 85% of analysts rating their stocks as Buy or equivalent [12].