DraftKings Inc. (NASDAQ:DKNG) shares declined on Friday. The decline comes as Guggenheim lowered its price target on the stock and the Commodity Futures Trading Commission (CFTC) announced a major policy shift regarding prediction markets.
• DraftKings stock is among today’s weakest performers. Why is DKNG stock falling?
Guggenheim Reduces Price Target
Guggenheim lowered the firm’s price target on DraftKings to $42 from $45 while maintaining a Buy rating on the shares, according to Benzinga Pro.
CFTC Announces Policy Reversal
CFTC Chair Michael S. Selig said Thursday that the regulator will draft “clear rules” for prediction markets and withdraw a proposal that prohibits sports and politics-related contracts.
“It is time for clear rules and a clear understanding that the CFTC supports lawful innovation in these [prediction] markets,” Selig declared in a public statement.
Selig directed agency staff to drop the 2024 rule proposal that prohibited political and sports event contracts. He also instructed them to scrap the 2025 advisory that urged prediction markets to exercise caution over offering sports contracts due to legal concerns.
Market Uncertainty Addressed
“For too long, the CFTC’s existing framework has proven difficult to apply and has failed our market participants,” Selig remarked. The commission is now drafting “clear standards” for event contracts to provide regulatory clarity.
Competing Sports Betting Stocks Show Mixed Results
Shares of Flutter Entertainment PLC (NYSE:FLUT) dropped 3.93% in Friday’s premarket trading session, while Genius Sports Ltd. (NYSE:GENI) were down 2.38%. Robinhood Markets Inc. (NASDAQ:HOOD) rose 1.88% and Coinbase Global Inc. (NASDAQ:COIN) declined 1.10%.
Earnings & Analyst Outlook
Investors are looking ahead to the next earnings report on Feb. 12.
- EPS Estimate: 37 cents (Up from 14 cents year-over-year)
- Revenue Estimate: $1.96 billion (Up from $1.39 billion YoY)
Analyst Consensus & Recent Actions: The stock carries a Buy Rating with an average price target of $49.30. Recent analyst moves include:
- Guggenheim: Buy (Lowers target to $42 on Jan. 29.)
- Morgan Stanley: Overweight (Raises target to $53 on Jan. 16)
- Wells Fargo: Upgraded to Overweight (Raises target to $49 on Jan. 15)
Price Action: DraftKings closed Thursday’s regular session at $29.94, down 0.60%, and traded at $29.18 in Friday’s pre-market, down 2.54%, according to data from Benzinga Pro. It is trading down 5.49% at $28.30 at publication Friday.
Photo: Wirestock Creators / Shutterstock
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