Shares of DraftKings Inc. (DKNG) tumbled approximately 15% in premarket activity on Friday, February 13, 2026, following the release of the company's financial outlook for the year 2026, which fell short of analyst expectations. The decline sets the stage for a significant opening drop, extending recent losses for the online sports betting operator.
Forecast Disappoints Amid Heavy Investment Plans
The primary driver behind the sell-off was the company's projected revenue and profit metrics for 2026. DraftKings forecast revenue in a range of $6.5 billion to $6.9 billion, alongside adjusted EBITDA—earnings before interest, taxes, depreciation, and amortization—of $700 million to $900 million. Wall Street analysts, however, had been anticipating more robust figures, with consensus estimates pointing toward revenue near $7.32 billion and adjusted EBITDA just under $1.0 billion.
Management attributed the more conservative guidance to increased investment spending, specifically tied to the expansion of its new federally regulated prediction markets platform, DraftKings Predictions. CEO Jason Robins emphasized the platform's potential, describing it as a "massive, incremental opportunity" that could evolve into a $10 billion annual gross revenue market. Nonetheless, the near-term costs associated with scaling this venture are expected to pressure profitability targets that investors had previously modeled.
Fourth-Quarter Performance Provides Mixed Signals
The company's results for the fourth quarter of 2025 presented a contrasting picture. Revenue surged 43% year-over-year to $1.989 billion, and the firm reported record revenue and adjusted EBITDA for the period. However, a key user metric disappointed: the number of monthly unique payers remained flat at 4.8 million, missing analyst forecasts and raising questions about user growth momentum in its core sportsbook operations.
Furthermore, the company reported adjusted earnings per share of 36 cents for the quarter, which also fell short of market expectations. This combination of strong top-line growth but softer bottom-line and user metrics has created a complex narrative for investors to digest.
Strategic Context and Market Risks
DraftKings' strategic move into prediction markets represents a calculated effort to diversify its business model. These platforms allow users to trade contracts based on event outcomes and operate under federal regulation, potentially providing a pathway into markets where traditional sports betting remains prohibited. This initiative, dubbed DraftKings Predictions, is seen as a long-term growth driver but introduces significant near-term execution risk and capital expenditure.
Industry analysts have expressed caution regarding the speed at which prediction markets can achieve scale without negatively impacting the margins of the core sportsbook business. Additionally, the broader prediction markets industry is facing increased regulatory scrutiny, which could lead to tighter rules just as companies like DraftKings ramp up their investments. The inherent volatility of sports betting results, where a string of unfavorable game outcomes can swiftly erode margins, adds another layer of operational risk.
Investor Focus Shifts to Upcoming Events
Attention now turns to the company's earnings conference call scheduled for 8:30 a.m. ET on Friday. Investors are keenly awaiting detailed quantitative guidance on the planned investment for the Predictions platform, its expected contribution to earnings, and any potential for marketing costs to escalate. Clarity on assumptions regarding tax implications and the competitive landscape will also be sought.
The next major milestone on the corporate calendar is a virtual investor day scheduled for March 2, where management has promised to provide a more comprehensive breakdown of its strategic initiatives and financial roadmap. The premarket decline follows a 4.3% drop in DraftKings' share price on Thursday, closing at $25.16. Cumulatively, the stock has retreated roughly 53% from its 52-week high, reflecting broader challenges within the sector and specific concerns about the company's growth trajectory and spending plans.
