DraftKings stock jumps 11% as prediction markets volume surges

Shares of DraftKings DKNG rallied on Tuesday after the sports-betting company reported strong growth in activity on its predictions platform.

The update fueled investor optimism about DraftKings' position in the rapidly expanding prediction markets industry.

At the time of writing, DraftKings stock was up more than 11%, making its largest one-day percentage gain in more than three-and-a-half years. 

The move followed a regulatory filing in which the company disclosed preliminary operating metrics for May.

The update highlighted accelerating trading activity on DraftKings Predictions, the firm's entry into the prediction markets space.

The strong reaction comes after a difficult period for the stock.

DraftKings shares have faced pressure over the past year due to broader sector challenges and growing competition from prediction market operators such as Kalshi and Polymarket.

Prediction platform posts strong growth

According to the company's SEC filing, annualized consumer trading volume on DraftKings Predictions increased 24% month over month to $1.3 billion in May.

Annualized total trading volume rose even faster, climbing 34% from April to reach $3.1 billion.

DraftKings noted that the figures are preliminary, based on internal data, and remain subject to change.

The results suggest growing adoption of the company's prediction market offering.

These platforms allow users to trade contracts tied to outcomes ranging from sporting events to financial markets and geopolitical developments.

The category has attracted significant attention in recent years as prediction markets expanded beyond traditional sports wagering.

To compete in the space, DraftKings and rival FanDuel each launched their own prediction market platforms after acquiring regulated futures exchanges and building new products.

Competition remains intense

Despite the recent growth, DraftKings remains much smaller than established prediction market operators.

According to Dune data, Kalshi generated $10.4 billion in sports trading volume during May alone.

Still, DraftKings benefits from years of experience acquiring and retaining sports-betting customers.

The company also has access to potential users in large states that have not legalized traditional sports betting, including Texas and California.

The timing may also prove favorable. The company is positioning itself ahead of the 2026 FIFA World Cup, which is being hosted by the United States, Canada, and Mexico.

Industry analysts continue to see long-term potential in prediction markets.

"We view prediction markets as a large, early-stage opportunity that expands the addressable market, with meaningful upside potential over time but limited reliance in the near term," TD Cowen analysts wrote in a research note on Monday.

The firm maintained a Buy rating on DraftKings and a $30 price target.

Analysts remain optimistic on outlook

Analysts have highlighted that DraftKings is funding its expansion into prediction markets through the strength of its core sports-betting business.

According to TheFly, TD Cowen said DraftKings' core operation is "inflecting toward durable profitability, driven by product depth, structural hold, and operating leverage."

The firm also named DraftKings its top pick among small- and mid-cap stocks.

Other Wall Street firms remain constructive as well. UBS recently maintained its Buy rating and raised its price target to $49.

From a technical perspective, DraftKings has improved significantly in recent weeks. Shares are trading above their 20-day, 50-day, and 100-day moving averages.

However, the stock remains below its 200-day moving average, suggesting longer-term resistance remains in place.

The stock's relative strength index stands at 51.23, indicating neutral momentum.

Technical analysts identify resistance near $32 and support around $23.50.

As prediction markets continue to gain popularity, investors will be watching whether DraftKings can convert growing trading activity into a meaningful new source of long-term revenue growth.