DraftKings Hit with Downgrade, Price Target Cut
Posted on: November 11, 2025, 09:28h.
Last updated on: November 11, 2025, 09:42h.
- CBRE Equity Research downgrades stock, slashes price target
- Analyst cites prediction market concerns, related spending, among other factors
- Investors are resetting expectations, says research firm
Shares of DraftKings (NASDAQ: DKNG) are trading slightly lower early Tuesday after the beleaguered gaming stock was hit with a downgrade and downward price target revision.
In a note to clients, CBRE Equity Research analyst John DeCree lowered his rating on the stock to “hold” from “buy” while cutting his price forecast to $36 from $46, citing increased competition from prediction markets and DraftKings’ own related expenditures, among other factors. His new price target implies upside of about 20% from current levels.
While we see plenty of long-term growth for DKNG as a top-two player with significant white space in the US and continued innovation, we are moving to the sidelines as investors reset expectations and wait for the next major catalyst,” observes the analyst.
Last week, DraftKings pared its 2025 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and revenue guidance, and while the company didn’t get into details as why the downward revisions occurred, the consensus among analysts and investors is that the sportsbook operator reined in its annual outlook due to client-friendly NFL outcomes and costs associated with the upcoming launch of its event contracts platform, DraftKings Predictions.
DraftKings Predictions Could Be Long-Term Win
Although DraftKings stock has shed about 30% of its value since the start of football season – a stunning decline for a name that often thrives at this time of year – it’s widely believed that the real culprit is bettors’ NFL success, not the oft-noted soaring volume on yes/no exchanges.
DeCree acknowledges that, to date, prediction market operators haven’t materially disrupted sportsbook outfits such as DraftKings, but the analyst said the competitive threat is real, noting that the situation could be amplified as prediction markets improve pricing on sports event contracts and as those companies push into states that don’t currently allow sports betting.
As such, he sees DraftKings Predictions as a potential long-term positive for the operator and an avenue through which the gaming company expands its total addressable market (TAM).
“We appreciate DKNG’s proactive approach to launching DraftKings Predictions and offering sports event contracts in new states. While it’s unclear how the legal landscape for prediction markets will play out, we believe this move is a net positive for DKNG as it widens its TAM and customer reach,” adds the CBRE analyst.
DraftKings Prediction Markets Outlook
Last month, DraftKings announced the acquisition of Railbird Technologies, the parent company of prediction markets firm Railbird Exchange, as well as the upcoming launch of DraftKings predictions. It’s rumored, though not confirmed, that the overall cost the buyer is paying for Railbird is $250 million in cash and stock.
That’s not a scary amount of money, but DraftKings will face other expenses, including advertising and marketing, as it nears the debut of its event contracts platform, and those expenditures are likely to be scrutinized by investors.
The company has indicated it will roll out its prediction markets offering in states where it currently doesn’t hold sports wagering permits, but how that plays out in California and Florida — states where gaming expansion is controlled by tribal nations — remains to be seen.
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