TLDR
- DraftKings stock fell 11% on Tuesday to $37.65 with no company-specific news
- Private competitor Kalshi posted record sports betting volume over the weekend, breaking its previous high from the November 2024 election
- September consumer sentiment data from The Conference Board came in worse than expected
- Second quarter data showed DraftKings unique visitors flattened compared to the previous quarter
- Insider selling activity has increased, raising concerns among investors
DraftKings stock took a beating on Tuesday, dropping 11% to close at $37.65. The decline came without any direct news from the company itself.
The main culprit? A private betting platform called Kalshi just had its best weekend ever.
Kalshi, backed by venture capital firms since 2018, started as a platform for betting on real-world events like economic data and political outcomes. The company launched its trading platform in mid-2021.
But things have changed. Kalshi recently pushed into real-time sports betting, and the results caught Wall Street’s attention.
This past Saturday, Kalshi hit a record for trading volume. Then Sunday came along and broke that brand-new record.
The back-to-back records marked the first time Kalshi had seen that level of activity since the November 2024 presidential election, nearly a year ago. That kind of momentum from a private competitor spooked investors in public betting stocks.
DraftKings wasn’t the only one feeling the pain. Other public sports betting companies also fell into the red on Tuesday.
Slowing Growth Metrics Raise Questions
The competitive worries come at a tricky time for DraftKings. The company’s second quarter results showed some warning signs beneath the surface.
Sports book handle revenue jumped 45% last quarter. That sounds great until you look at the details.
The revenue growth came mostly from take rate increases, not from more betting activity. Actual sports book betting volumes only grew 11%.
There’s another red flag. Unique visitors to DraftKings platforms stayed flat compared to the first quarter.
When a growth company stops adding new users, investors get nervous. The stock trades at 28 times this year’s earnings expectations and 18.6 times 2026 estimates.
Consumer Spending Concerns Add Pressure
Tuesday also brought bad news on the consumer front. The Conference Board released its September consumer sentiment reading, and it missed expectations.
Consumer discretionary stocks took a hit across the board. DraftKings falls squarely in that category since betting is optional spending.
Trading volume on Tuesday reached 30.8 million shares, more than three times the average daily volume of 8.8 million shares. That heavy trading suggests real concern among investors.
The insider activity hasn’t helped either. Increased insider selling raised eyebrows about what executives think the stock might do next.
Despite the drop, DraftKings still has support from analysts. The company received positive ratings and praise for its performance in the New York market.
DraftKings also recently announced a multi-year advertising deal with NBCUniversal. Analysts highlighted the company’s year-over-year growth in hold percentage and gross gaming revenue.
The market cap now sits at $21 billion, down from higher levels earlier this year. The stock has gained 16.6% year-to-date despite Tuesday’s drop.
DraftKings’ 52-week range runs from $29.64 to $53.61, and Tuesday’s price of $37.65 sits closer to the bottom than the top.
