"MoffettNathanson stated that it is 'very late to downgrading DKNG and FLUT at this point,' acknowledging the significant decline in both stocks this year. The firm believes that attractive valuations on conservative long-term forecasts are 'no longer enough to maintain our Buy recommendations.'"
"The core concern for DraftKings is the competition from prediction markets, with CFTC-regulated platforms like Kalshi and Polymarket drawing event-contract volume away from regulated sportsbooks. MoffettNathanson does not foresee 'the clouds lifting on these stocks until there is some regulatory clarity on prediction markets.'"
"DraftKings is heavily investing in DraftKings Predictions, a federally regulated event-contracts platform under CFTC oversight. This investment is pressuring near-term profitability, even as CEO Jason Robins describes Predictions as a 'massive, incremental opportunity.'"
DraftKings was downgraded by MoffettNathanson from Buy to Neutral, with a price target reduced from $38 to $27. The downgrade reflects concerns over competition from prediction markets, which are impacting DraftKings' stock performance. The stock has declined 34% year-to-date, trading at $22.64. MoffettNathanson noted that while valuations were previously attractive, they are no longer sufficient to maintain a Buy rating. DraftKings is investing in a regulated event-contracts platform, which is affecting near-term profitability despite long-term growth potential.
Read at 24/7 Wall St.
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