DKNG has given back all of last week's 3.3% gain and then some, dropping nearly 12% to $25.15 — yet the options market and the analyst community have barely flinched, creating an unusual divergence between price action and positioning.
The directional signal from options remains firmly bullish despite the sell-off. The put/call ratio has actually tightened further to 0.37, essentially matching the 52-week low of 0.37 and sitting below its 20-day average of 0.39. Call buyers are not retreating on the weakness, which keeps options positioning at its most lopsidedly bullish in the past year. The borrow market adds little drama to the story: availability is running at over 1,060% — more than ten shares available to borrow for every one already shorted — and the cost to borrow has eased 21% on the week to just 0.44%. Shorts face no friction whatsoever, and a squeeze is nowhere in the picture. Short interest itself has barely moved, holding at 8.4% of the free float with roughly 41.6 million shares short, essentially flat week-on-week after the 15% one-month rebuild noted in last week's note. The short book is not adding aggressively into the drop.
The Street is equally unmoved by the weakness. Analysts broadly maintained their constructive stance this week: Guggenheim reiterated its Buy and $35 target on June 24, Citizens held at Market Outperform with a $34 target on June 22, and the consensus remains a clean Buy across 22 analysts. The mean price target of $34.87 implies roughly 39% upside from current levels — a gap that has widened sharply with the stock's fall. The bull case rests on DraftKings' market leadership in online sports betting, a 30%-plus EBITDA margin target, and a Super App strategy that the company reiterated as recently as last week's note. The bear case centres on lagging market share gains, regulatory uncertainty, and the argument that the stock remains expensive relative to near-term earnings power. A forward EPS growth estimate ranked in the 95th percentile on a year-on-year basis gives bulls a concrete number to anchor to; the EV/EBITDA multiple of 14.4x has compressed about 3% over the past 30 days as the stock has weakened.
The sector move is worth contextualising. Flutter Entertainment (FLUT), the closest peer with a 70% price correlation, fell 10.2% on the week — nearly matching DKNG's decline. Genius Sports (GENI) dropped an even steeper 14.7%. Penn Entertainment (PENN) fell 6.1%. The broad-based weakness across gaming names suggests a sector rotation or macro-driven de-risk rather than anything company-specific at DraftKings, which makes the call-buyer persistence — and the analysts' refusal to cut — more legible.
The ORTEX short score of 48.2 has drifted only slightly higher over the past week, consistent with a short book that is holding rather than pressing. On the institutional side, AQR added 6.5 million shares in Q1 and Spruce House added 5.4 million — both meaningful builds at prices likely above current levels, making them paper losers on those additions for now.
Next up is the August 6 earnings date, and the key question heading into it is whether call buyers and a supportive analyst community can sustain conviction through what has been a sharp two-week drawdown — or whether the gap between the $25 stock price and a $35 consensus target starts to look less like opportunity and more like a reset.
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