Shares surged 7.2% to $23.76 as investors looked past a messy top line and zeroed in on swelling customer numbers and a fast-growing prediction-markets business. DraftKings reported Q2 revenue of $1.44 billion, missing Wall Street's $1.51 billion estimate and falling 5% year over year. Yet the stock rallied — a clear signal the market is pricing DraftKings on where it's headed, not where it just was.
More Bettors Showed Up, but Each One Spent Less
Monthly unique payers hit 3.6 million, well above the 3.1 million Wall Street expected.
But average revenue per payer of $132 missed the roughly $160 target — a sign DraftKings is winning the customer land-grab by giving up revenue per head through heavier promotions.
The company attributed the revenue decline to "customer-friendly sports results" — meaning bettors won more than usual — and increased promotional reinvestment. The question is whether these newly acquired users stick around and spend more once discounts ease.
The Prediction Markets Side Hustle Is Scaling Fast
DraftKings' predictions business saw annualized volume rocket from $2.3 billion in April to $11 billion in July, with more than 600,000 customers engaging year-to-date. CEO Jason Robins called it "growing faster than we anticipated." Management left the door open to exceed its planned $200–$300 million predictions investment if customer acquisition costs remain favorable. That's both an opportunity and a risk: heavy spending on an unproven revenue stream could pressure near-term profitability.
Guidance Held Firm While a Rival Flinched
DraftKings reaffirmed full-year revenue guidance of $6.5–$6.9 billion and adjusted EBITDA (operating profit before certain costs) of $700–$900 million. That matters because rival Flutter Entertainment slashed its own outlook and announced $270 million in additional U.S. spending, while DraftKings' core business remains on track to produce annualized EBITDA of roughly $1 billion. A softer July jobs report also gave consumer-discretionary stocks a tailwind by raising hopes for lower interest rates.
The Real Test Comes This Fall
Robins is eagerly anticipating football season as a fertile customer acquisition period.
Analysts still carry a consensus Buy rating with an average price target of $35.43 — roughly 49% above Friday's close. But with EBITDA down 62% year over year and the stock trading on promise rather than profit, shareholders are essentially betting that millions of new users will eventually pay full price.