DraftKings Inc. (NASDAQ:DKNG) saw its stock climb 4.55% on Friday, closing at $26.17, a move that outpaced the broader market as the Nasdaq Composite rose just 0.43%. The surge came as the sportsbook's aggressive promotional strategy, including a $150 bonus bet offer for new customers who wager just $5, pushed the brand to the top of Google Trends.
The promotion, which runs through August 23 at 11:59 p.m. EDT, is part of DraftKings' efforts to expand its user base ahead of the fall sports season. According to updated trackers, the offer delivers six $25 non-withdrawable bonus bets over a 14-day period, each expiring seven days after issuance. Terms vary by state, and the deal is subject to wagering requirements and eligibility restrictions.
While the promotion has clearly attracted attention, it also underscores the mounting costs of customer acquisition. In the second quarter, DraftKings reported a 9% increase in monthly unique payers to 3.6 million, but average revenue per payer fell 13% to $132. Sales and marketing expenses jumped 38.3% year-over-year to $322.5 million, representing 22.4% of total revenue, up from 15.4% in the prior-year period.
The gap between betting engagement and revenue is stark. Sports wagering handle grew 14.5% to $13.14 billion, yet sports-related revenue declined 10.6% to $891.9 million. This 25.1 percentage point divergence highlights how generous payouts and promotional incentives can outweigh even robust betting volumes.
The financial impact was significant. Adjusted EBITDA fell to $114.6 million from $300.6 million a year earlier, and the company swung to a net loss of $67.6 million after posting a profit of $157.9 million in Q2 2025. Despite these headwinds, management maintained its full-year 2026 revenue guidance of $6.5 billion to $6.9 billion, with adjusted EBITDA still expected between $700 million and $900 million.
CEO Jason Robins emphasized that the core business "grew across handle, users, and engagement," but investors remain wary of the payback period for such aggressive acquisition spending. The company's promotional economics are under scrutiny, especially as it expands into new markets and invests in prediction markets, which could lengthen the timeline to profitability.
Friday's rally also lifted other gaming stocks. Flutter Entertainment (NYSE:FLUT) rose 3.05%, MGM Resorts International (NYSE:MGM) gained 1.32%, and PENN Entertainment (NASDAQ:PENN) advanced 1.11%. However, DraftKings still trades 24.3% lower for the year and sits 46.4% below its 52-week high. Trading volume on Friday reached 8.5 million shares, roughly one-third below its 10-day average.
Wall Street remains cautiously optimistic. Despite several brokers trimming price targets after the Q2 earnings miss, the consensus target stands at $32.50, implying about 24% upside from Friday's close. Analyst targets range from $27 (Bernstein) to $38 (Macquarie), with most firms maintaining Buy or Overweight ratings.
Risks persist, including the unpredictable nature of sports outcomes, potential regulatory changes, and state gaming taxes that could further inflate customer acquisition costs. The promotion ends Sunday night, and investors will be watching to see if DraftKings can sustain its momentum and whether fall sports offers become even more generous. The company has not yet announced a date for its next earnings report.
