DraftKings Shares Drop as Prediction-Market Spending Plans Raise Margin Concerns
DraftKings (NASDAQ:DKNG) shares fell by 4% in early Wednesday trading after CEO Jason Robins indicated the company plans to increase marketing spend on its prediction-markets business, potentially pulling forward investment from next year. This shift is expected to compress near-term margins despite a strong start to NFL season sportsbook handle growth and an adjusted EBITDA forecast of around $1 billion for 2026. Flutter Entertainment (NYSE:FLUT), parent company of FanDuel, also declined by 1% on similar concerns about margin pressure from increased spending in the prediction-markets segment. In contrast, Robinhood Markets (NASDAQ:HOOD) rose slightly by 0.8%, as investors appear to favor platforms that already have established customer bases for event contracts over those needing to acquire new users. The broader market was mixed with the Consumer Discretionary Select Sector SPDR Fund (XLY) down 1% and the S&P 500 ETF Trust (SPY) falling by 0.8%. However, DraftKings' decline outpaced these benchmarks, highlighting investor concern over its near-term financial outlook.
Topics: DraftKings Flutter Entertainment margins marketing spend prediction markets Robinhood Markets