DraftKings has gotten torched over the last six months - since October 2025, its stock price has dropped 31.9% to $22.27 per share. This was partly driven by its softer quarterly results and might have investors contemplating their next move.
Is now the time to buy DraftKings, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Do We Think DraftKings Will Underperform?
Despite the more favorable entry price, we're cautious about DraftKings. Here are three reasons we avoid DKNG and a stock we'd rather own.
1. Lackluster Revenue Growth
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. DraftKings’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 28.5% over the last two years was well below its five-year trend. 
2. Operating Losses Sound the Alarms
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
DraftKings’s operating margin has risen over the last 12 months, but it still averaged negative 5.8% over the last two years. This is due to its large expense base and inefficient cost structure.
3. Free Cash Flow Projections Disappoint
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Over the next year, analysts’ consensus estimates show they’re expecting DraftKings’s free cash flow margin of 10.7% for the last 12 months to remain the same.
Final Judgment
We cheer for all companies serving everyday consumers, but in the case of DraftKings, we’ll be cheering from the sidelines. Following the recent decline, the stock trades at 23.5× forward P/E (or $22.27 per share). This valuation tells us a lot of optimism is priced in - we think there are better opportunities elsewhere. We’d suggest looking at the most entrenched endpoint security platform on the market.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
