DraftKings (DKNG) – Breakout Potential Ahead of a Critical Q4 Report
DraftKings (DKNG) trades around $34, and we think there’s a solid case for upside heading into its fourth-quarter earnings report.
Here’s what stands out:
The company has guided for $273 million at the high end of Q4 revenue, but several signs point to an actual result closer to $287 million. That kind of beat would do more than just impress Wall Street—it could help ease concerns about growing competition in the prediction market space, especially as DraftKings ramps up its offerings.
Another reason we’re watching the stock closely is its expansion into event contracts. DraftKings plans to roll out a full suite of event contract products across 17 states, tapping into what Wells Fargo estimates to be a $75 billion total addressable market. If execution goes well, that could become a meaningful new revenue stream.
Margins may also improve going forward, thanks in part to DraftKings’ move into prediction markets, which tend to be less resource-intensive than traditional sportsbook operations.
Wells Fargo just upgraded the stock to Overweight and raised its price target to $49, which would represent a 43% upside from Wednesday’s close. That puts them in line with the majority of analysts—30 out of 38 now have a Buy or Strong Buy rating on the stock.
With shares still down about 11% over the past year, there’s room to catch up—especially if Q4 results come in strong. We think this could be a solid setup for a breakout in the coming weeks.
