Here’s Why Wells Fargo Downgraded DraftKings (DKNG) Farooq Thu, November 12, 2026 at 3:59 PM EST 3 min read DKNG -2.65% ^GSPC -0.35% ^IXIC -0.39% Trade DKNG on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
We just published a list of the 10 Stocks Analysts Are Downgrading Right Now and DraftKings (NASDAQ:DKNG) ranked 9th on this list.
Stocks slid again on Tuesday after a hotter-than-expected inflation report fed bets on higher interest rates, and all three major indexes finished lower. The Dow fell 0.30% to 52,231.89, the S&P 500 lost 0.38% to 7,520.93, and the Nasdaq Composite dropped 0.74% to 25,065.87.
Government data showed consumer prices rose 0.4% in October, the third straight monthly gain of at least that size, against the 0.3% economists expected. Core prices rose 0.3%, ahead of a 0.2% forecast, and traders spent the session weighing how many more rate increases may be coming.
Federal Reserve Governor Christopher Waller said the central bank should raise rates in December and consider a half-point increase, while Dallas Federal Reserve President Lorie Logan said at least two more quarter-point hikes are needed. Traders now see an 84% chance of a quarter-point move next month and a 15% chance of a half-point increase.
Jason Ware, chief investment officer at Albion Financial Group, told Reuters that investors are spooked by the possibility of a 50 basis point hike. That worry landed on a market that had already taken a beating: the Nasdaq closed nearly 12% below its October peak last week, and the S&P 500 sank 4.4% in a single session, its worst day since April 2025. For the other side of that debate, see our list of oversold AI stocks where Wall Street analysts see 50%+ upside.
Skyler Weinand, chief investment officer at Regan Capital, said stocks have seen a heavy rotation out of AI-related names and into defensive sectors such as healthcare. Technology took the sharpest hit. Last week the S&P 500 technology sector fell 7.3% and the Philadelphia semiconductor index dropped more than 12% as fears of a data-center slowdown spread after the midterm elections.
Oxford Economics expects the Fed to raise rates in December and again in March, while Kansas City Fed President Jeff Schmid described policy as still accommodative.
DraftKings made it to our list because it drew an analyst downgrade on November 10 and has an average upside potential of 33%.
Wells Fargo analyst Trey Bowers downgraded DraftKings to Equal Weight from Overweight on November 10 and cut his price target to $21 from $30. The call follows the third-quarter report, after which the shares fell 21% on a revenue miss and a guidance reset tied to prediction-market spending.
DraftKings runs a sportsbook and an online casino. It cut its 2026 adjusted EBITDA guidance by 72% at the midpoint to $225 million, mostly because of spending on its prediction markets product, DraftKings Predictions, and its first look at 2027 came in about 20% below consensus. The company has said that a 2028 ban on sports prediction markets would stretch the payback on that investment, so the regulatory outlook is a concern for investors. DraftKings has also paused its share buybacks, and the stock is down 46% so far this year, at $18.70 after the report. The core sportsbook and online casino business was broadly in line with expectations once unfavorable sports results are set aside. We asked why earnings keep falling while more people bet in our earlier look at the sportsbook's growth.
While we acknowledge the risk and potential of DKNG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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