DraftKings Inc. (NASDAQ: DKNG) saw its stock price plummet 8.90% in pre-market trading on Friday, following the release of its disappointing third-quarter earnings report. The sharp decline came as the sports betting giant reported financial results that fell short of analyst expectations and cut its full-year outlook, overshadowing positive developments in its business strategy.

For the third quarter, DraftKings reported revenue of $1.14 billion, missing the analyst consensus estimate of $1.20 billion. While the company's adjusted loss per share of $0.26 beat expectations of a $0.42 loss, the revenue shortfall and other factors weighed heavily on investor sentiment. The company cited customer-friendly sports outcomes as partially offsetting growth from customer engagement and new user acquisition.

In a move that further rattled investors, DraftKings lowered its full-year 2025 revenue guidance to a range of $5.9 billion to $6.1 billion, down from the prior range of $6.20 billion to $6.40 billion. The company also slashed its adjusted EBITDA outlook for the full fiscal year to $450 million to $550 million, down from the previous $800 million to $900 million range. This reduced guidance takes into account the planned launch of DraftKings Predictions, a new venture into prediction markets, as well as the expected launch of mobile sports betting in Missouri.

Despite the disappointing results, CEO Jason Robins expressed optimism, stating, "This is the most bullish I have ever felt about our future." The company's move into prediction markets and its recent partnership with ESPN as the official sportsbook and odds provider suggest a strategic pivot. However, investors appear concerned about the near-term impact on profitability and increased competition in the rapidly evolving sports betting landscape. As DraftKings navigates this transition, the market will be closely watching how these initiatives affect the company's financial performance in the coming quarters.