DraftKings Stock Dropped 12.3% in October
October was a challenging month for DraftKings (DKNG +0.90%) as its shares fell 12.32%, closing at $30.59 on Halloween, the lowest since August 2024. The decline reflected investor concerns about the impact of emerging competitors and NFL outcomes on the sportsbook operator.
Market Concerns and Prediction Markets
Investors reacted negatively to the rising activity on prediction markets like Kalshi. These markets are seen as competitive threats to DraftKings and similar companies, causing a sell-off in sports-wagering stocks.
Impact of NFL Outcomes on Profitability
Despite the headlines focusing on prediction markets, the main pressure on DraftKings' third-quarter margins and profits stemmed from bettors' favorable NFL results. In September, a key month for sportsbooks, DraftKings experienced losses, prompting some analysts to reduce their quarterly forecasts.
Potential for Earnings-Driven Recovery
The negative trends from the NFL season's start appear largely reflected in the current stock price. DraftKings’ upcoming third-quarter earnings report, due Thursday, could provide the basis for a recovery, though this outcome is uncertain.
"The bad news, particularly the struggles over the first month of the NFL season, is arguably baked into DraftKings shares at this point. So it's possible the company's third-quarter earnings update could act as the foundation for a rebound."
Author's summary: DraftKings' stock faced strong headwinds in October due to competition and NFL results, but upcoming earnings might offer a chance to reverse the decline, although no guarantee exists.