UBS and other banks downgrade DraftKings as prediction market losses mount
DraftKings' stock fell near its April 2023 low as Wall Street soured on its prediction market spending. UBS downgraded the company to Neutral and cut its price target. Analysts at JPMorgan Chase and Stifel also downgraded the sports betting company. DraftKings has invested nearly $1 billion in its prediction market product. The losses from the business are weighing on the company's outlook and drawing scrutiny from investors.
DraftKings' wall of analyst downgrades turns prediction markets from a growth narrative into a balance-sheet threat. The $750 million 2027 revenue target looks distant when 2025 revenue is immaterial and promotions are eating most gross revenue. FanDuel Predicts is burning comparable cash with $3 million US adjusted EBITDA against a $50 million revenue target.
Neither leader has proven the model pays back. Investors are now pricing in the risk that both platforms spend through a regulatory overhaul that never arrives. The first to show sustainable unit economics wins data partnerships and regulatory air cover.