DraftKings, a top digital sports entertainment and gaming company, has seen its stock decline by 14% over the past month, driven by a broader market downturn linked to tariffs imposed by Trump on key trading partners and growing tensions from the U.S.-China trade war. Our take on the market crash risk right now offers more insights into the tariff situation and its effects on the broader economy.
We think DraftKings stock, currently trading at $32, represents a solid buying opportunity. Based on our evaluation, the stock’s fair valuation reflects only minor concerns, especially considering its strong operational results and solid financial position. We came to this conclusion by comparing DKNG’s current market valuation with its recent and historical operating performance and financial standing. The assessment below covers key metrics such as Growth, Profitability, Financial Stability, and Downturn Resilience, all of which point to the company’s inherent strength.
How Does DraftKings’ Valuation Compare With The S&P 500?
When comparing valuation in terms of price per dollar of revenue or profit, DKNG stock is currently valued similarly to the overall market.
- DraftKings has a price-to-sales (P/S) ratio of 3.4 compared to 3.2 for the S&P 500
How Has DraftKings’ Revenue Grown In Recent Years?
DraftKings’ Revenues have experienced strong growth over the past few years.
- DraftKings’ revenue has grown at an average annual rate of 55.5% over the past 3 years (compared to 6.3% for the S&P 500)
- Over the last 12 months, revenue increased 30.1% from $3.7 billion to $4.8 billion (compared to 5.2% growth for the S&P 500)
- Quarterly revenue also rose 13.2% to $1.4 billion in the latest quarter from $1.2 billion a year earlier (compared to 5.0% growth for the S&P 500)
How Profitable Is DraftKings?
DraftKings’ profit margins remain significantly lower than most other companies in the Trefis universe.
- DraftKings’ Operating Income for the past four quarters was -$609 million, resulting in a very low Operating Margin of -12.8% (compared to 13.0% for the S&P 500)
- DraftKings’ Operating Cash Flow during the same period was $418 million, translating to a moderate OCF-to-Sales Ratio of 8.8% (versus 15.7% for the S&P 500)
Is DraftKings Financially Stable?
DraftKings has a healthy balance sheet.
- At the end of the latest quarter, DraftKings reported $1.3 billion in debt, with a market cap of $16 billion (as of 4/7/2025), indicating a strong Debt-to-Equity Ratio of 8.2% (compared to 19.0% for the S&P 500). [Note: Lower Debt-to-Equity ratios are generally preferred]
- Cash and equivalents totaled $788 million out of $4.3 billion in total assets, giving it a strong Cash-to-Assets Ratio of 18.4% (compared to 14.8% for the S&P 500)
How Resilient Is DKNG Stock During Economic Downturns?
DKNG stock has performed slightly better than the S&P 500 during recent downturns. As investors hope for a soft landing in the U.S. economy, it’s worth asking—how severe could the impact be if another recession hits? Our dashboard How Low Can Stocks Go During A Market Crash explores how major stocks have performed during and after the last six market crashes.
Inflation Shock (2022)
- DKNG stock dropped 85.7% from a peak of $71.98 on March 19, 2021, to $10.27 on May 11, 2022, compared to a 25.4% decline for the S&P 500
- The stock has not yet returned to its pre-crisis peak
- The highest level since then was $53.49 on February 17, 2025, and it is currently trading near $32
Covid Pandemic (2020)
- DKNG stock declined 0.2% from a high of $10.70 on January 1, 2020, to $10.68 on January 2, 2020, while the S&P 500 fell 33.9%
- The stock quickly recovered to its pre-pandemic high by January 6, 2020
Bringing It All Together: What Does This Mean For DKNG Stock?
To summarize, DraftKings’ performance across various indicators is as follows:
- Growth: Extremely Strong
- Profitability: Very Weak
- Financial Stability: Very Strong
- Downturn Resilience: Neutral
- Overall: Strong
Given DraftKings’ solid performance on these fronts—which we believe is not fully captured in its current fair valuation—we see the stock as a compelling buying opportunity. In fact, analysts’ average price target of $57 for DKNG suggests a strong 75% upside from current levels.
While DKNG stock may see higher levels, the Trefis Reinforced Value (RV) Portfolio, has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
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