DraftKings Stock Target Trimmed, Analysts See Bottom Forming

DraftKings stock (DKNG) closed at $21.76 last week following an 18.65% weekly decline, capping a brutal start to the year that has seen shares plunge 38.98% year-to-date.

The sell-off in DKNG intensified after the sports betting giant issued 2026 guidance that fell short of Wall Street expectations, triggering a wave of analyst downgrades and renewed questions about the company's near-term profitability amid aggressive expansion plans.

Jefferies analyst David Katz moved over the weekend to lower his price target on DraftKings to $46 from $50, though he maintained a Buy rating on the shares.

In a research note to investors, Katz suggested that the decline in both the company's estimates and stock price should be at an end. The analyst emphasized that DraftKings' conservative guidance incorporates the brunt of predicted launch costs for new initiatives without corresponding revenue, including ESPN Bet development and expansion into new states.

Crucially, Jefferies believes demand for U.S. sports wagering is not decelerating and that DraftKings should remain a leader in the rapidly evolving market.

The stock's sharp descent was made worse on February 12, when DraftKings issued 2026 revenue guidance of $6.5 billion to $6.9 billion alongside adjusted EBITDA projections between $700 million and $900 million. Both figures came in below consensus estimates, sparking immediate concern about intensifying competition and the financial impact of the company's push into prediction markets.

Shares tumbled 13.5% that session alone, marking one of the worst single-day performances in recent memory for the online gaming operator.

Despite the disappointing outlook, DraftKings delivered robust fourth-quarter 2025 results that demonstrated the underlying strength of its core business. Revenue surged 43% year-over-year to $2 billion, while the company swung to net income of $136 million compared to a loss of $135 million in the prior-year period. The profitability milestone underscored DraftKings' ability to generate earnings when not burdened by heavy investment cycles, a point several analysts have highlighted in their assessments.

The DraftKings stock valuation implies significant skepticism about the company's ability to execute its expansion strategy while maintaining competitive positioning. However, Jefferies' assertion that the decline should be at an end points to a potential inflection point, particularly if demand trends remain robust and DraftKings can demonstrate operational leverage as new initiatives mature.

Markets will be watching closely for signs that the company's conservative guidance proves overly cautious, which could trigger a meaningful revaluation.