In Response to the Prediction Market Threat, Draftkings Takes a Big Hit. According to One Analyst, the Sell-off is Overdone

Berenberg Capital Markets is growing more confident in DraftKings’ long-term outlook, even after the stock’s recent decline. The investment firm upgraded DraftKings shares to a “buy” rating from “hold,” signaling renewed optimism in the sports betting leader’s fundamentals. However, analyst Jack Cummings trimmed his price target slightly, lowering it to $43 from $45 per share. Despite the modest cut, that new target still represents an upside potential of roughly 27% from current levels.

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So far this year, DraftKings stock has dropped about 9% and is down nearly 30% since late August. The sharp pullback has been driven largely by growing investor concerns that the emerging prediction market industry where users wager on real-world events rather than traditional sports outcomes could eat into DraftKings’ market share.

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But according to Cummings, the perceived threat remains more theoretical than real. “Despite the potential risks, we’ve seen no tangible impact on DraftKings’ financial performance so far,” the analyst wrote.

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He also noted that the legality and market overlap between prediction platforms and regulated sports betting remain unclear.

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“There’s still a lack of transparency around how much crossover exists between legal betting markets and these emerging prediction platforms,” Cummings added. “And from a regulatory standpoint, the legality of many of these products is far from established.”

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Cummings argued that DraftKings’ recent selloff appears overblown, especially given the company’s strong fundamentals and leadership position in U.S. online gaming.

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“Shares have fallen sharply more than 20% in the past 10 days on fears of disruption from prediction markets,” he said. “We believe this move is excessive and see about 30% upside from current levels to our new $43 price target.”

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Beyond the short-term volatility, Cummings pointed to DraftKings’ resilient business model and improving margins as key reasons for his renewed confidence.

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“While earnings estimates have been revised slightly lower due to unfavorable sports outcomes, DraftKings continues to post strong growth,” he noted. “Its core operations have shown real progress, especially when it comes to margin expansion and operational efficiency.”

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That operational strength has been evident as DraftKings continues to scale its business across regulated markets. The company’s focus on user engagement, customer retention, and cost control has allowed it to expand margins even in a competitive environment.

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Cummings added that as the sports betting market becomes more mature, DraftKings is well positioned to maintain its leadership in the U.S. a market expected to remain the company’s growth engine for years to come.

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“We expect DraftKings to keep outperforming peers as the U.S. market evolves,” he said. “The company has consistently proven its ability to execute and innovate, which should translate into sustained profit growth over the coming years.”

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DraftKings’ stock volatility in recent months has reflected investor nervousness about new forms of digital wagering, such as decentralized prediction markets, which allow users to bet on political events, economic outcomes, or cultural trends. These platforms, still largely unregulated, have drawn attention from retail traders and speculators alike.

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However, analysts like Cummings remain skeptical about their long-term impact on established players like DraftKings. For now, the regulatory gray area surrounding these products could limit their ability to attract mainstream users.

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Meanwhile, DraftKings has continued to expand its market share in legal U.S. states while refining its product offerings and improving its balance sheet. Its emphasis on brand recognition, technological innovation, and responsible gaming continues to reinforce its competitive moat.

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Despite short-term headwinds, Berenberg sees the recent pullback as a buying opportunity for long-term investors. The firm believes that much of the recent pessimism surrounding DraftKings is already priced in, creating an attractive entry point.

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Berenberg’s bullish call reflects growing conviction that DraftKings’ fundamentals remain strong, even as the broader market reassesses high-growth names in the sports betting space.

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With a leaner cost structure, expanding profit margins, and a solid foothold in the U.S. market, DraftKings is well positioned to navigate short-term challenges and deliver steady earnings growth ahead.

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As Cummings summarized, “The market’s reaction to prediction market fears has been exaggerated. DraftKings continues to demonstrate consistent growth, and we see meaningful upside from current levels.”

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At a time when investors are looking for clarity amid uncertainty, DraftKings’ proven execution and brand strength could make it one of the most compelling plays in the digital gaming sector heading into 2026.

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