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DraftKings rebounds after Wall Street hears its prediction market plans

The company plans to launch its own predictions product in the coming months.

DraftKings more than reversed its 11% drop in the wake of its post-close earnings report Thursday, after briefing analysts in its earnings call about its plan to get its own prediction markets business up and running “in the coming months.”

Sportsbooks like DraftKings — and FanDuel, which is owned by Flutter Entertainment — have been battered in recent months, as it has become clear that gamblers are now often turning to prediction markets like Kalshi to take positions on the outcomes of NFL games rather than making bets on traditional sportsbooks.

DraftKings responded by recently buying CFTC-licensed derivatives exchange Railbird as it moves quickly to get its own prediction markets business up and running.

Prediction markets are currently federally regulated as financial derivatives by the CFTC — though there is ongoing litigation in which state gambling regulators argue that prediction markets should be subject to state laws on sports gambling.

At any rate, DraftKings executives told Wall Street analysts in a post-earnings conference call early Friday that it views these markets as a significant opportunity to expand into states where sports gambling is currently illegal.

In his opening remarks on the conference call, DraftKings CEO Jason Robins had this to say on the topic:

“We are excited about our pending launch of DraftKings predictions and its potential to expand our total addressable market in the coming months. We expect DraftKings predictions to enter many new states with sport event contracts, unlocking a new customer base and revenue stream.

Nearly half the country’s population remains without access to legal online sports betting. But there are several other companies offering federally regulated predictions in all 50 states as growth in predictions continues. This may also motivate more states to legalize online sports betting and iGaming with reasonable regulation and taxation.”

DraftKings has other growth strategies in the works as well, such as a Spanish-language version of its betting app “that will meet the demands for a growing audience ahead of the World Cup in 2026.”

The market clearly likes what it heard more than it liked the look of the numbers yesterday: the company fell short of sales expectations and trimmed its full-year guidance. After falling roughly 11% after-hours, DraftKings regained all that ground and is up more than 3%.

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Retail traders are “skipping the dip” this time

Here’s one noteworthy feature of the recent market downturn that has the S&P 500 poised for its worst week since reciprocal tariffs were announced in early April: retail traders seemingly aren’t eager to buy the weakness in single stocks the way they used to be.

JPMorgan strategist Arun Jain has flagged that retail traders instead appear to be “skipping the dip.”

“In contrast to the behavior observed during the post-Liberation Day selloff, retail investors did not seize the opportunity to buy-the-dip on Tuesday, with a few exceptions such as META,” he wrote of the day where the benchmark US stock index fell 1.2%. “In fact, they scaled back their ETF purchases and turned net sellers in single stocks.”

Then on Thursday, when the S&P 500 fell 1.1%, Jain projected that retail traders sold $261 million in single stocks. Through noon ET on Friday, his daily outflow estimate stands at $851 million.

With that intel, it’s little wonder why the carnage this week has been particularly intense in more speculative single stocks that had been favored by the retail community, including IREN, IonQ, Rigetti, Cipher Mining, Bloom Energy, and Oklo.

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Archer Aviation plunges on $650 million share sale following its third-quarter results

Air taxi maker Archer Aviation is deep in the red on Friday morning after reporting its third-quarter results after the bell Thursday. The stock is down more than 12%.

Investors don’t appear to be thrilled about the company’s $650 million direct stock offering, announced alongside its results.

The move marks at least the third major equity raise, and dilution, for Archer this year. The company raised $300 million from a new stock sale in February, and sold $850 million worth of shares in June.

On Archer’s earnings call Thursday, interim CFO Priya Gupta said the company came to the decision after “substantial inbound interest.” According to Gupta, the company has heard from government and commercial partners that liquidity is a “key driver to their decisions of who to partner with.” With its latest share sale, Archer said its total liquidity is more than $2 billion.

The move marks at least the third major equity raise, and dilution, for Archer this year. The company raised $300 million from a new stock sale in February, and sold $850 million worth of shares in June.

On Archer’s earnings call Thursday, interim CFO Priya Gupta said the company came to the decision after “substantial inbound interest.” According to Gupta, the company has heard from government and commercial partners that liquidity is a “key driver to their decisions of who to partner with.” With its latest share sale, Archer said its total liquidity is more than $2 billion.

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