DraftKings CEO Jason Robins could not sway the market with his comments to stop the stock’s selloff, but he certainly ramped up expectations for the future.
Robins made it clear that the primary focus for 2026 is scaling DraftKings Predictions, which launched in December and is still rolling out all of its features. Unfortunately for shareholders and analysts, everyone will need to wait a few more weeks until Investor Day on March 2 to hear about those plans in detail, Robins said on Friday‘s earnings call.
For now, the conservative outlook for this year announced Thursday afternoon left the market wanting more. DraftKings‘ stock closed at $21.76, down 13.5%, on 65.5 million in volume, which is more than five times its average daily volume.
That is the lowest closing price since May 4, 2023.
Conservative guidance is Robins’ preference
DraftKings was conservative for guidance in its first few years as a public company, which led to multiple quarters of beating and raising guidance. A similar situation of getting punished for what was perceived as low guidance in 2023 hurt the stock, only to beat and raise every quarter that year.
“I like that playbook a lot better, and we got away from that,” Robins said. DraftKings originally had an adjusted EBITDA target of $900 million to $1 billion for 2025 but ended the year at $620 million.
Robins explained what the process of coming up with full-year guidance looked like this time:
“My team came in and showed me a number and said, “We can hit this.” And I said, “No, go make it lower.” And they went back, and they said, “Okay, now, really, like, we’re sure we can hit this.” And I said, “I don’t care, make it lower again.” And that’s what we got.
But, you know, for me, missing numbers again is just not acceptable, and so it’s not something we’re willing to do.”
DraftKings 2026 guidance ‘ugly’
DraftKings announced it expects 2026 adjusted EBITDA between $700 million to $900 million from between $6.5 billion and $6.9 billion in revenue.
Giving the market a chance to see the results 16 hours before the conference call sometimes works out positively for the stock. That was not the case this time.
The break gave analysts a chance to issue quick takes, some of which were straight to the point. Jeffrey Stantial of Stifel called the guide “ugly” while Barry Jonas of Truist noted the conservative guide was overshadowing the rest of the report.
“[Management] is not seeing any real impact from Prediction Markets, but 2026 guidance was well below Street estimates,” Jonas said. “We suspect this is meant to be conservative after a series of hold driven misses/guide-downs in 2025.”
CFTC actions driving DraftKings’ optimism
The change in tone from the Commodity Futures Trading Commission is what has Robins excited about the predictions business.
“I wouldn’t say it’s a change of tone as much as an acceleration of our excitement,” Robins said. “I think part of it is there’s been a real lean in from the CFTC. What went from sort of a hands-off, you know, we’re not gonna comment posture from the previous interim chairs, now, you know, a full-fledged affirmation that this is something that the CFTC considers to be firmly under their jurisdiction, they intend to defend in the courts, and they’re going to issue real guidelines and regulations.
“So, anything that creates a stable regulatory environment that allows us to operate more freely is a great upside thing for us.”
New CFTC Chairman Michael Selig said he was going to leave sports predictions up to the courts, suggesting it might get as far as the Supreme Court. That tone changed after he was formally appointed chairman as Selig called for two memos showing concern for sports predictions to be withdrawn and said the CFTC will be inserting itself into the various sports prediction markets lawsuits to fight for the right to regulate them.
Meanwhile, there are various legislative attempts at the state and even federal level to keep sports contracts off of CFTC-regulated platforms.
Customer acquisition the focus for DraftKings Predictions
DraftKings is not baking any predictions revenue into its guidance. Robins said of course there will be some revenue realistically, it is just too early to quantify.
So far, other than predictions customers tending to be from California and Texas, they look a lot like DraftKings’ existing sports betting customer base, Robins said.
Robins did not put a number on expected customer acquisition investment for DraftKings Predictions, but noted its national marketing opportunities with ESPN and NBC can be used for sports, predictions, or even both.
“In terms of the question around, you know, marketing, I think this is actually a huge advantage of ours,” Robins said. “Most customers don’t really even understand the difference. So I think the national marketing footprint is a big advantage because we can, you know, drive people towards our product and we can use it in ways that we can rotate messages and have slightly different things, but in essence, it’s the same general message to the customer. And I think that provides us a ton of leverage and synergy. It’ll drive value to both products at the same time.”
The predictions product will continue to improve throughout the year, especially when Railbird is integrated in the second quarter. That includes “exclusive combination trading options that may become a major differentiator as the customer experience evolves,” Robins said.
