DraftKings pulled off something it had never done in 13 years of existence: it turned a profit. The sportsbook operator posted positive net income of $3.7 million for the full year 2025 — a massive swing from the $507 million net loss it recorded the year before. Fourth-quarter revenue surged 43% year-over-year to $1.99 billion, meeting estimates. Earnings per share came in at $0.25, beating the $0.16 Wall Street expected. CEO Jason Robins called it “a strong close” to the year.
So naturally, the stock crashed 17%.
The culprit was DraftKings’ 2026 guidance. The company forecast full-year revenue between $6.5 billion and $6.9 billion — a startling miss against the $7.3 billion analysts were expecting. That’s not a rounding error; it’s a gap of $400 million to $800 million between what Wall Street wanted and what DraftKings thinks it can deliver. The stock dropped to around $22, its lowest level since April 2023 and down more than 50% over the past year.
Dig into the operational metrics and the cracks get more visible. Handle growth — the total dollars bet by customers — decelerated hard, growing just 4% in January compared to 11% a year ago. Meanwhile, marketing spend ballooned to $442.6 million in Q4 alone, up 52% from two years ago. DraftKings is spending significantly more to acquire users whose betting volumes are growing significantly less. Average revenue per monthly user hit $139, up 43% year-over-year, but that’s more about squeezing existing users than organic expansion.
The elephant in the room is prediction markets. Platforms like Kalshi and Polymarket have exploded onto the scene with exchange-style betting products that operate under federal regulation, sidestepping the state-by-state tax burden that weighs on traditional sportsbooks. DraftKings is scrambling to respond — it launched its own prediction markets app in 38 states in December, acquired the Railbird exchange for up to $250 million, and plans to launch its own market-making division in Q2. Robins is talking big, calling prediction markets “the most exciting growth opportunity since PASPA was struck down in 2018” and targeting “hundreds of millions in annual revenue” from the new vertical.
But J.P. Morgan analysts called the guidance “disappointing” and said it’s “unlikely to calm investor fears that handle declines are attributable to prediction markets.” In other words, Wall Street sees DraftKings pivoting from a proven business that’s decelerating into an unproven one — and spending heavily to do it. The company that just posted its first-ever profit is now racing into a capital-intensive new category with well-funded competitors already in the lead. For a stock that’s lost half its value in 12 months, the pitch to “trust us, it’ll work” is a tough sell.