DraftKings Shares Plunge After Q3 Miss and Sharp Forecast Cut

DraftKings shares fell about 24% in after-hours trading on Thursday, November 5, 2026, after the sports betting company reported weaker third quarter results than Wall Street expected and cut its profit outlook for the full year. The main reason for the cut is a big new investment in prediction markets, a business that lets people trade contracts on the outcome of events.

What happened

DraftKings reported third quarter revenue of $1.33 billion, up 16% from $1.14 billion a year earlier. That was below the roughly $1.40 billion analysts had expected, according to CNBC. The company posted a net loss of $468.7 million, or 94 cents a share, compared with a loss of $256.8 million, or 52 cents a share, in the same quarter last year. On an adjusted basis, the loss was 53 cents a share, worse than the 39 cent loss analysts polled by LSEG had expected.

The bigger shock was the outlook. DraftKings cut its full year 2026 revenue guidance to $6.35 billion to $6.55 billion, down from $6.5 billion to $6.9 billion. It cut its 2026 adjusted EBITDA guidance, a common measure of operating profit, to $175 million to $275 million, down from $700 million to $900 million. The company said the cut mainly reflects $650 million to $700 million it plans to spend this year on DraftKings Predictions, its new prediction markets business, including $175 million to $225 million in the fourth quarter alone.

The shares had closed the regular session up 1.77% at $23.52, on a day the Nasdaq Composite slid more than 5% into correction territory. In after-hours trading they fell to $17.95 by 6:28 p.m. ET, down 23.68%, according to CNBC market data.

Inside the quarter, sports revenue rose 31.5% to $783.6 million, while online casino revenue grew only 2.1% to $460.9 million. Customers placed $13.9 billion in settled wagers and trades, up 21.9%. Monthly paying customers rose about 13% to 4.1 million, and more than 1.6 million customers have used Predictions so far this year. Sales and marketing expenses jumped to $605.7 million from $360.4 million a year earlier.

Looking further ahead, DraftKings issued 2027 revenue guidance of $7.35 billion to $7.75 billion. It expects Predictions to bring in $650 million to $750 million of revenue in 2027, while costing $250 million to $350 million in adjusted EBITDA. Executives were due to discuss the results on a conference call at 8:30 a.m. ET on Friday, November 6.

Why it matters for beginners

A company can grow its sales and still see its shares fall sharply. DraftKings grew revenue 16%, but investors focused on two things: the revenue miss and the much lower profit outlook. When a company cuts its forecast by hundreds of millions of dollars, the market often reprices the shares at once, and that is what happened here.

The story also shows how one new bet can change a whole year. DraftKings is spending heavily to build its prediction markets business, and that spending is coming straight out of this year’s profit. The company believes the business will pay off over time, and it expects its 2026 group of Predictions customers to pay back in about 20 months. But investors have to wait for that payoff, and waiting is uncomfortable when the cost is this large.

It also shows why a single company can be much riskier than a broad market. On the same day, the Nasdaq fell more than 5%, yet DraftKings fell about 24% after hours. One disappointing report can move one stock far more than the market. Our guide to what risk in investing means in simple terms explains why spreading money across many companies can reduce the damage from one company doing badly, although it does not remove market risk.

What to watch next

First, listen for what executives say on the Friday morning conference call about how fast Predictions can grow and when it stops losing money. Second, watch the next quarterly report to see whether sports revenue keeps growing and whether the core business holds its own profit outlook of $875 million to $925 million in adjusted EBITDA. Third, watch whether the share price steadies or keeps falling once regular trading resumes, and whether the wider market sell-off continues to pull down growth stocks. None of this is a signal to buy or sell. It is a reminder to judge a company by its results and its outlook, not by one day’s price move.

Frequently asked questions

Why did DraftKings shares fall if revenue grew 16%?

Because revenue came in below the $1.40 billion analysts expected, the loss was wider than expected, and the company cut its full year profit outlook sharply. Markets react to results compared with expectations, not just to growth on its own.

What are prediction markets?

Prediction markets let people trade contracts that pay out based on the outcome of an event, such as a sports result or an election. DraftKings Predictions sells federally regulated event contracts overseen by the Commodity Futures Trading Commission.

How much is DraftKings spending on prediction markets?

The company plans to spend $650 million to $700 million on the business in 2026, including $175 million to $225 million in the fourth quarter. That spending is the main reason its 2026 adjusted EBITDA guidance fell to $175 million to $275 million.

What did DraftKings forecast for 2027?

DraftKings expects 2027 revenue of $7.35 billion to $7.75 billion, including $650 million to $750 million from Predictions. It expects adjusted EBITDA of $800 million to $1.0 billion for the group in 2027.

Does this mean sports betting is in trouble?

No. DraftKings sports revenue rose 31.5% in the quarter, and customers placed $13.9 billion in settled wagers and trades. The share fall was driven by the earnings miss and the cost of the new prediction markets push, not by a collapse in betting demand.

Sources

SourceFirst News, DraftKings Q3 2026 results: loss widens, 2026 forecast cut, November 5, 2026, reporting CNBC market data and the company’s Business Wire release: https://sourcefirstnews.com/draftkings-q3-2026-results-guidance-cut-prediction-markets

This article is for general information and education only. It is not legal or financial advice.