DraftKings shares rise 8.4% on prediction-market growth

DraftKings shares jumped 8.4% to close at $24.03 Wednesday after the company posted mixed second-quarter results that still pointed to strong growth in prediction markets and customer activity. Trading volume hit 36.1 million shares, nearly triple the three-month average of 13.2 million, underscoring investor excitement. The surge came despite a 5% drop in reported sales, which analysts attributed to an unusually high number of customer-friendly sports outcomes during the quarter.

The company’s core betting business is now projected to generate $1 billion in adjusted EBITDA this year, and its prediction services saw annualized volumes quintuple from April to July. Yet the numbers fell short of Wall Street expectations for revenue and earnings, leaving some analysts puzzled by the market’s enthusiasm. The optimism reflects growing confidence that prediction markets could become a major revenue stream, even as DraftKings navigates regulatory hurdles and potential overlap with its traditional sports-betting business.

The broader market also rose, with the S&P 500 up 0.6% and the Nasdaq gaining 1.3%, while peer stocks showed mixed results—Flutter Entertainment gained nearly 2%, while Rush Street Interactive slipped slightly. DraftKings’ strong post-earnings rally builds on a 145% increase since its 2019 IPO, but questions remain about long-term profitability given the competitive and regulatory landscape.

Investors betting on prediction markets will need to watch how DraftKings balances innovation with execution. If prediction services continue growing as fast as they have in recent months, the stock’s momentum could hold. But with regulatory risks and potential cannibalization from sports betting, today’s surge may be as much about hope as hard numbers. The company’s ability to convert prediction-market interest into sustainable profits will determine whether this rally lasts beyond the next earnings cycle.