DraftKings (DKNG) Stock Could Trade At A Discount On Sales But A Premium On Returns

DraftKings stock has fallen sharply over the past few years, yet current market multiples still screen the company as undervalued. This makes its recent track record a more complicated read for anyone focused on price versus fundamentals.

• Over the past 5 years, DraftKings has delivered a decline of about 62%, which means long term holders have seen substantial capital erosion even before considering valuation checks.
• Heavy spending on marketing and new credit facilities can support revenue growth and liquidity. At the same time, questions around corporate governance and related-party arrangements may weigh on how much value investors are willing to assign to that growth.
• On a broad set of valuation checks, DraftKings lands in a mixed zone rather than a clear bargain or clearly expensive stock, with a value score of 3 suggesting neither side of the valuation debate has an obvious edge.

For investors, the debate is whether DraftKings' current share price already reflects its business risks and marketing-heavy model or still leaves room for a more attractive entry based on today’s fundamentals.

Compare DraftKings' mixed 5 year return and its valuation score of 3 with other opportunities by scanning 52 high quality undervalued stocks, which also pairs fundamentals with a market price that still appears compressed.

Is DraftKings Still Cheap on Sales?

P/S is a useful lens for DraftKings because the company is still building toward consistent profitability, so investors often focus on how much they are paying for each dollar of revenue. DraftKings currently trades on a P/S of about 1.9x. That is higher than the Hospitality industry average of roughly 1.7x and above the peer group average of about 1.5x, so on simple comparisons the stock does not look especially cheap.

The fair P/S ratio implied by a more tailored framework is around 3.4x, which reflects the company’s specific mix of growth profile, margins, scale and risk. Against that benchmark, DraftKings trades at a sizeable discount on sales, even after heavy marketing spend and fresh credit facilities that keep revenue under close investor scrutiny. Despite the recent jump in TV ad spending and mixed earnings updates, the current P/S still prices DraftKings below what this model suggests for a stock with its characteristics.

On the preferred P/S multiple, DraftKings stock screens as undervalued relative to the level implied by its fundamentals and risk profile.

See what the numbers say about this price — find out in our valuation breakdown.

The DraftKings Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for DraftKings help you connect that valuation puzzle to specific future paths for the business by spelling out what would need to happen to DraftKings' growth, margins and earnings for the stock to be worth materially more or less than today’s price on the Community page. Rather than stopping at a single ratio or model output, they describe the future that number is leaning on so you can follow how closely reality matches the underlying assumptions over time.

Community views on DraftKings are split between prediction market upside and concern that the stock still prices in a lot of execution risk.

Bull case: 30% undervalued

"DraftKings is poised to benefit from the continued expansion of legal online sports betting and iGaming into new states such as Missouri, as well as potential future openings..."

Read the full Bull Case to see why DraftKings could be undervalued

Bear case: 15% overvalued

"As legalization slows, competition intensifies, state tax rates rise, and new prediction market platforms such as Kalshi and Polymarket begin competing for users, DraftKings may find sustaining its growth increasingly difficult..."

Read the full Bear Case to see why DraftKings could be overvalued

Do you think there's more to the story for DraftKings? Head over to our Community to see what others are saying!

The Bottom Line

DraftKings looks undervalued on the preferred P/S multiple, yet broader checks keep the verdict mixed rather than clearly cheap. That tension reflects investors weighing a discounted sales multiple against concerns around governance, heavy marketing spend and execution risk. The key question from here is whether DraftKings can convert its revenue base into durable, cleaner profitability without relying on ever higher spending. If that happens, today’s discount on sales could look appealing. If not, the current gap may simply be the market pricing in those risks rather than offering a clear opportunity.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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