Bank of America analysts on Tuesday downgraded Draftkings Inc (NASDAQ:DKNG) to ‘Neutral’, while reducing its price objective to $35 per share, citing “relentless” headwinds that could hurt the sports betting platform’s long-term earnings power.
In a note to clients, the analysts pointed to factors such as the company’s underperformance in iGaming, with its market share declining from 27% to 23% over the last two years, and never-ending state taxes, which has pressured its margins by about 200 basis points, as reasons for their pessimism.
They also view the possibility of competitive marketing and price wars occurring from prediction markets.
As such, they lowered their 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA) estimate to $1 billion, from $1.26 billion previously, and below the Wall Street forecast of $1.28 billion, reflecting $75 million of prediction market investment.
The analysts from Bank of America also reduced their 2027 EBITDA estimate to $1.4 billion from $1.7 billion.
DraftKings shares fell more than 5% to $28.96 in midday trading on Tuesday.