DraftKings (NASDAQ: DKNG) has seen a surge in its stock price recently, with potential for further growth as the gaming giant taps into the increasing popularity of prediction markets and sports betting.
In a recent analysis, Macquarie analyst Chad Beynon described DraftKings as “one of the most compelling structural growth narratives in the gaming sector,” emphasizing that investors can benefit from these factors at an “appealing valuation.” He acknowledged that the sportsbook operator’s second-quarter performance stumbled due to favorable World Cup results for customers, but highlighted its strong customer acquisition rates from April to June.
“Management reported that solid retention and engagement from newly acquired customers has been a positive factor thus far in Q3,” notes Beynon. “In the last quarter, DraftKings acquired 30% more customers than projected and invested 10% more in customer acquisition while the underlying costs were approximately 25% better than expected.”
Last week, DraftKings announced a 73% increase in customer acquisition during the June quarter, while related expenses decreased by 8%. Beynon rates the stock as “outperform” with a price target of $38, indicating a potential upside of around 52% from its current level.
Prediction Markets as an Opportunity
For the past year, yes/no exchanges have been perceived as competitive threats to sportsbook operators, contributing to declines in share prices for DraftKings and FanDuel parent company Flutter Entertainment (NYSE: FLUT).
However, Beynon believes that DraftKings is advancing faster than anticipated in prediction markets, suggesting that this emerging industry could serve as a long-term positive driver for the stock.
“The core business is picking up speed, while Predictions seems poised to emerge as a substantial growth sector rather than a competing one,” the analyst adds.
DraftKings launched its DKeX exchange in late June, integrating its DraftKings Predictions platform to gain full control over the economics of its event contracts. The company noted that over 600,000 users have interacted with DraftKings Predictions this year, and retention rates are comparable to those seen with its sportsbook.
Positive Momentum Leading into NFL Season
DraftKings stock is building positive momentum just as college football and the start of the 2026 NFL season approach—events likely to create new opportunities for both prediction market and sportsbook operators.
In a promising development for DraftKings, the firm observed that parlays and combinations are currently making up 20% of turnover on DraftKings Predictions, even before the onset of football season—the most popular betting sport in the U.S.
“Management’s commentary from July regarding the NFL suggests that the company enters the latter half of 2026 with significant momentum,” concludes Beynon.