Key takeaways

  • Stifel Nicolaus sets a $21.00 price target for DraftKings, implying a 13.50% upside from its $18.51 price.
  • DraftKings is increasing its 2026 investment in its "Predictions" offering to $650 million–$700 million, impacting near-term profit.
  • The company reported $1.33 billion in Q3 revenue, a 16% increase, but also a $317 million adjusted EBITDA loss due to increased investment.

DraftKings (NASDAQ: DKNG) is an online sports betting company expanding into prediction markets. Jeffrey Stantial of Stifel Nicolaus sets a $21.00 price target for the shares. That is about 13.50% above the $18.51 price when he posts the target.

The target comes as DraftKings spends more on its Predictions offering. On its Nov. 6 third-quarter earnings call, the company raises its planned 2026 investment in the business to $650 million–$700 million. Management says it is recovering customer acquisition costs faster than expected, even as the added spending puts pressure on near-term profit.

DraftKings reports third-quarter revenue of $1.33 billion, up 16% from a year earlier, while sportsbook net revenue rises 36%, as highlighted by The Motley Fool. Monthly unique payers grow 13% to 4.1 million, and average revenue per payer increases 3% to $109.00. These figures show growth in both customer activity and spending.

The company also reports a $317 million adjusted EBITDA loss. Adjusted EBITDA is a measure of operating performance that leaves out certain costs; Chief Financial Officer Alan Ellingson says higher Predictions investment is the main reason for the loss. DraftKings lowers its 2026 revenue guidance to $6.35 billion–$6.55 billion, as highlighted by MarketBeat.

The spending plan adds risk to Stantial’s price target. As highlighted by MarketWatch, analysts raise concerns about regulation and competition around prediction markets. DraftKings sees the business as a possible source of steadier revenue, but the cost of building it now weighs on its earnings outlook.