Key Takeaways
- Shares of DraftKings jumped over 11% on Tuesday, marking the strongest daily performance in more than three-and-a-half years.
- Consumer trading volume on DraftKings Predictions reached an annualized $1.3 billion in May, representing a 24% monthly increase.
- Combined annualized trading volume surged 34%, reaching $3.1 billion for the month.
- Analyst ratings vary: TD Cowen holds a Buy with $30 target while UBS upgraded to $49.
- The company still trails Kalshi significantly, which recorded $10.4 billion in sports trading volume during May.
Shares of DraftKings (DKNG) experienced a dramatic rally on Tuesday, climbing more than 11% following the release of encouraging preliminary data from its prediction markets division. This represented the company’s most significant single-session gain in over three-and-a-half years, with shares beginning Wednesday’s trading at $27.59.
The positive metrics emerged from an SEC filing that detailed May performance data for DraftKings Predictions, the company’s prediction markets offering.
The platform’s annualized consumer trading volume expanded 24% compared to the previous month, reaching $1.3 billion. Meanwhile, total annualized trading volume demonstrated even stronger growth, jumping 34% from April levels to hit $3.1 billion.
DraftKings emphasized that these numbers are preliminary estimates derived from internal tracking systems and remain subject to revision.
The stock had faced headwinds throughout the previous twelve months, buffeted by broader industry challenges and intensifying competition from specialized prediction market platforms such as Kalshi and Polymarket.
Expansion in Prediction Markets Space
Prediction markets enable participants to trade contracts based on potential outcomes spanning sports events, economic indicators, and political developments. This segment has experienced rapid expansion, drawing interest from both individual traders and institutional participants.
Both [[LINK_START_2]]DraftKings[[LINK_END_2]] and competitor FanDuel entered this arena by purchasing regulated futures exchanges and developing proprietary platforms.
The strategic timing appears calculated. The company is establishing its position ahead of the 2026 FIFA World Cup, which will take place throughout the United States, Canada, and Mexico — an event expected to generate substantial trading activity.
Additionally, the platform gives DraftKings access to customers in populous states like Texas and California, where conventional sports wagering remains prohibited.
However, significant competitive gaps remain. Data from Dune indicates that Kalshi alone generated $10.4 billion in sports-related trading volume during May.
Wall Street’s Take
TD Cowen reaffirmed its Buy rating on DKNG with a $30 price objective, characterizing prediction markets as “a large, early-stage opportunity that expands the addressable market.”
The firm further highlighted that DraftKings’ primary operations are “inflecting toward durable profitability, driven by product depth, structural hold, and operating leverage,” designating it as a preferred selection among small- and mid-cap equities.
UBS adopted a more bullish stance, maintaining its Buy recommendation while elevating its price target from $43 to $49.
JPMorgan maintains an Overweight rating but reduced its objective to $31. BNP Paribas assigns an Underperform rating with a $20 price target.
Overall Street consensus stands at Moderate Buy with an average price objective of $34.21, reflecting 28 Buy recommendations, 9 Hold ratings, and 2 Sell ratings.
Regarding institutional activity, Capital World Investors increased its holdings by 181.4% during Q4, while Vanguard expanded its position by 3.1%.
The company’s latest quarterly results, announced on May 8th, delivered EPS of $0.20, falling short of the $0.22 consensus estimate by $0.02. Revenue totaled $1.65 billion, marginally exceeding the $1.63 billion forecast and representing a 16.8% year-over-year increase.
From a technical perspective, the stock now trades above its 20-day, 50-day, and 100-day moving averages while remaining below the 200-day moving average. The RSI registers at 51.23, suggesting neutral momentum. Wall Street identifies resistance near $32 and support around $23.50.
CEO Jason Robins is expected to participate in an upcoming investor conference, where the company’s prediction markets initiatives will likely receive substantial attention.
