DraftKings Inc.: 2Q26 Takes; Maintained FY26 Guidance Provides Relief; 3Q Off to a Strong Start; Stay OW, PT $33 ($-1)

Research evidence excerpt

J P M O R G A N

North America Equity Research

07 August 2026

DraftKings Inc.

2Q26 Takes; Maintained FY26 Guidance Provides

Relief; 3Q Off to a Strong Start; Stay OW, PT $33 (-$1)

Overweight

DKNG, DKNG US

Price (06 Aug 26):$22.17

▼Price Target (Dec-27):$33.00

Prior (Dec-27):$34.00

DKNG’s report itself was better than feared, as 2Q adj. EBITDA of $115m was

similar to JPMe/buy-side expectations and investors were relieved that the

company maintained its FY26 guidance, especially after peer FLUT lowered.

Positives that stood out were commentary on (1) Predictions momentum, (2) opex

prudence/restraint, and (3) post-World Cup July handle +20% y/y, with strength

seen carrying into NFL. We take a more balanced view on the recent surge in

customer acquisition (DKNG spent 10% more than planned, but CACs 25% lower

than anticipated), and similarly, we think it’s difficult for DKNG to be fully

insulated from FLUT accelerating SB promo spend.

On Predictions, DKNG is providing a lot of encouraging KPIs and upbeat

commentary (product traction, expanding TAM, vertical integration), but it is

holding its cards close on how the financial benefits will flow through in the

coming quarters/years (2Q PM revs may have been modestly negative given

promos). We continue to believe DKNG’s FY26 EBITDA guide is achievable,

though we remain positioned at the low end of the range out of conservatism. Stay

OW, PT $33 (-$1).

Core biz: key takes. 2Q OSB Bridge: Handle $12.7b (+11% y/y), structural

hold ~11.5% (+55 bps y/y), less 0.6% unfavorable hold ($80m on WC/Knicks),

less 3.8% promos equals 7.1% net sports margin. We estimate promos of

$479m were +36% y/y, and promo rate of 3.8% was +70bps y/y. 3Q is off to

a strong start with favorable WC hold in July (we estimate ~$60m favorable

hold), and handle post-World Cup +20% y/y. While 2Q sales/marketing

exceeded our estimate, adj. G&A was $7m better than forecast (and down 6%

y/y), while Product/Tech costs were in line. Management noted that “cost

management will continue to be a major focus for the company going

forward.”

Predictions: key takes. (1) Implied Consumer-facing prediction volumes

…