Analysts Split on DraftKings After Q1 2025 Hold Woes and EBITDA Cut

A Mixed Bag for DraftKings

DraftKings’ Q1 2025 earnings, hit hard by customer-friendly March Madness and NFL results, sparked a range of analyst takes, from bullish bets to cautious side-eyes.

The US betting giant cut its full-year adjusted EBITDA forecast, citing an $800 million revenue hit from low hold rates between 2023 and Q1 2025.

Barry Jonas of Truist said that he’s comfortable with the digital operators’ long-term growth trajectory, keeping a “buy” rating.

Yet, Deutsche Bank warned that “narratives, stories, and nuances drive most trading momentum,” questioning lofty forecasts. With DraftKings’ stock climbing post-earnings, analysts are split on whether its 4.3 million monthly users and AI-driven edge can outrun short-term hurdles.

The Bullish Case: Long-Term Wins

Plenty of analysts are still cheering DraftKings’ big-picture potential. Truist’s Jonas held his “buy” rating and $50 price target, tweaking 2025 estimates but leaving 2026 untouched, calling the hold dip “truly random in nature.”

He’s betting structural and actual hold will sync up soon. Stifel’s Jeffrey Stantial stuck with a “buy” and $53 target, nudging down 2026 EBITDA but praising DraftKings’ “compelling free cash flow trajectory” and knack for beating estimates.

Macquarie’s Chad Beynon kept an “outperform” rating, trimming his $53 target but noting DraftKings’ 16% handle growth outpaced the market’s 11%.

The $750 million Jackpocket buy, set to add $60-100 million in EBITDA by 2026, plus a 28% jump in monthly unique payers to 4.3 million, fuels their optimism. DraftKings’ AI-first vibe and live betting surge, over 50% of handle, keep it a step ahead.

The Skeptics: Hold and Sector Woes

Not everyone’s buying the hype. Deutsche Bank threw shade, questioning if DraftKings’ long-term goals are “even attainable,” given a “bumpy road” ahead.

They flagged three sector headaches: sluggish iCasino expansion, rising taxes in states like Maryland, and handle growth slowing to single digits.

They said that projections still look aggressive, especially beyond 2025, slamming DraftKings’ reliance on “add-back friendly” hold assumptions that “aren’t based in historical reality.”

Citizens echoed the hold gripe, pointing to $800 million in “lost” revenue since 2023, with the stock’s EBITDA multiple dropping from 21x to 12x as a “sign of frustration” from investors. Jackpocket’s lower per-user revenue and bans in Texas and New Mexico didn’t help, nor did DraftKings missing Q1 revenue consensus, despite a $0.12 adjusted EPS meeting expectations.

What’s Driving the Divide?

The hold issue is a big sticking point. DraftKings’ structural hold didn’t match reality, costing margins in a quarter where live betting, especially MLB, hit over 50% of handle.

Yet, bulls like Beynon see product tweaks boosting hold long-term, with smarter promos and AI sharpening the edge. The Jackpocket deal, while dragging average revenue per user, added 17% to payer growth, a solid base for cross-selling.

Bears, though, see storm clouds: tax hikes, regulatory bans, and a $1.1 billion cash pile that’s healthy but stretched by share buybacks. DraftKings’ $0.07 per-share loss, better than last year’s $0.30, keeps some faith alive, but skeptics want proof those rosy forecasts aren’t just hot air.