DraftKings (DKNG) stock jumped 11.3% Tuesday and is up another 6% so far today after the company revealed another month of rapid growth for its emerging Predictions business. The move reflects the market’s optimism that the business could become a major new growth driver.
In a June 9 SEC filing, DraftKings reported that annualized consumer volume on its Predictions platform reached $1.3 billion in May, up 24% from April. Annualized total volume traded climbed even faster, rising 34% month over month to $3.1 billion.
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Why Predictions Platform Matters for DraftKings
One of the most compelling aspects of the business is its ability to reach customers in markets without Sportsbook. According to the company, about 70% of Predictions sports consumer volume comes from states without Sportsbook offerings.
That suggests the platform is expanding DraftKings’ addressable market and brings an incremental growth opportunity.
Recognizing that opportunity, DraftKings has made Sports Predictions a strategic priority in 2026. Management said earlier that it plans to invest aggressively in product development, liquidity, and customer acquisition to establish a leadership position before the end of the year.
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The early results are encouraging. Since integrating Predictions into the flagship DraftKings app, customer acquisition costs have declined by more than 80%, while the number of available markets has more than doubled. More importantly, volume per Predictions customer has already surpassed Sportsbook handle per customer, suggesting strong user engagement with the new product.
DraftKings has also launched market-making capabilities, giving the company exposure to another layer of the trading ecosystem. Management said the initiative is already generating positive returns. The company expects to roll out a proprietary exchange and introduce combo products in the coming weeks. These additions could improve liquidity, enhance the customer experience, and strengthen overall economics.
Notably, DraftKings’ existing Sportsbook infrastructure gives it a competitive advantage in Sports Predictions. Both products target similar customers, rely on comparable technology, and depend on the same core capabilities, including pricing, liquidity, trust, and market creation.
At Investor Day, DraftKings outlined a potential $55 billion to $80 billion gross-revenue opportunity in Sports by 2030, while targeting a long-term adjusted EBITDA margin of at least 30%. The Predictions platform is expected to play an important role in achieving those goals. With annualized trading volume growing at an exceptional pace, the platform is seen as a meaningful contributor to DraftKings’ future earnings power.
What’s Next for DKNG Stock?
Despite yesterday’s jump, DraftKings stock remains under pressure. Shares are down roughly 15% year-to-date (YTD) and trade more than 40% below their 52-week high. Investor concerns have centered on the company’s weaker-than-expected 2026 guidance, margin pressure from increased product development spending, and heightened competition.
However, DraftKings’ underlying business remains strong. In the first quarter, DKNG’s revenue rose 17% year-over-year (YoY), while adjusted EBITDA surged 64%. The company also delivered its second consecutive quarter of positive net income and repurchased $99 million worth of shares.
Customer monetization remains a key strength. Average Revenue per Monthly Unique Payer (ARPMUP) increased 21.3% YoY, driven primarily by higher Sportsbook net revenue margins. While total Monthly Unique Payers (MUPs) declined 3.6%, the decrease was largely due to the company’s exit from Texas Lottery operations in 2025. Excluding the Lottery business, MUPs increased 2.1%, supported by strong customer retention and continued user acquisition across its Sportsbook and iGaming platforms.
Looking ahead, DraftKings’ rapidly growing Predictions product could emerge as a meaningful growth catalyst. Combined with lower customer acquisition costs, strong user engagement, and a large long-term market opportunity, this emerging segment could help accelerate revenue growth and strengthen the bull case for DKNG stock.
While not all analysts are backing DKNG stock, as reflected in a “Moderate Buy” consensus rating, solid earnings growth projections and a reasonable valuation (forward P/E multiple of 41.6) indicate upside potential in DKNG.
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On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
