DraftKings Expands Its Buyback Program: What's Driving the Shift?

DraftKings Inc. DKNG is taking a more visible step toward shareholder returns, with management announcing an expansion of its share repurchase authorization from $1 billion to $2 billion during the third quarter of 2025. The company has already repurchased 9.3 million shares under the program. As the authorization increases, investor attention has shifted toward how capital returns fit within DraftKings’ evolving financial profile.

During the third quarter, management emphasized that the decision to enlarge the buyback program was driven by underlying business progress and improving cash flow visibility, rather than near-term volatility. While reported results were influenced by customer-friendly sports outcomes, DraftKings reiterated full-year 2025 adjusted EBITDA guidance of $450 million to $550 million. The company highlighted stronger sportsbook economics, improving mix and continued iGaming momentum, alongside expectations that free cash flow will ramp over time.

DraftKings noted that share repurchases are being framed as part of a balanced capital allocation strategy. Management indicated that buybacks will scale alongside free cash flow generation, allowing the company to maintain investment in core product development, technology initiatives and adjacent opportunities such as prediction markets. 

Looking ahead, the expanded repurchase authorization suggests that capital returns are becoming a more established element of DraftKings’ operating model. While near-term performance may continue to reflect the variability inherent in sports outcomes, management’s willingness to commit additional capital to buybacks underscores growing confidence in the durability of cash generation. As the business continues to mature, shareholder returns are emerging as a structurally supportive component of DraftKings’ longer-term financial framework.

DKNG’s Price Performance, Valuation & Estimates

DraftKings’ shares have gained 1.8% in the past three months against the industry’s fall of 11.7%. In the same time frame, other industry players like Accel Entertainment, Inc. ACEL and Boyd Gaming Corporation BYD have gained 9.8% and 5.4%, respectively, while Melco Resorts & Entertainment Limited MLCO has declined 13.6%.

DKNG Three-Month Price Performance

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DKNG stock is currently trading at a discount. It is currently trading at a forward 12-month price-to-sales (P/S) multiple of 2.37, below the industry average of 2.55. Conversely, industry players, such as Accel Entertainment, Melco Resorts and Boyd Gaming, have P/S ratios of 0.69, 0.53 and 1.75, respectively.

DKNG’s P/S Ratio (Forward 12-Month) vs. Industry

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The Zacks Consensus Estimate for DraftKings’ 2026 earnings per share has declined in the past 30 days.

EPS Trend of DKNG Stock

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The company is likely to report solid earnings, with projections indicating a 79.6% surge in 2026. Conversely, industry players like Accel Entertainment, Boyd Gaming and Melco Resorts are likely to witness a rise of 10.6%, 9% and 45.6%, respectively, year over year in 2026 earnings.

DKNG currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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