Investors hoping for a quick payoff from Flutter Entertainment's aggressive push to grow its FanDuel betting business may need to wait longer than expected. That's the message from Oppenheimer, which trimmed its forecasts for the company and cut its price target in a note released Sunday, just days before Flutter reports third-quarter results on Wednesday.
Oppenheimer, an investment bank, said investors have been warming more to rival DraftKings because Flutter's U.S. strategy looks tougher to model. The bank pointed to higher debt, a growth-versus-profit trade-off at FanDuel, and fewer clear near-term catalysts as reasons for the caution.
What's behind the downgrade?
Flutter Entertainment, the parent company of FanDuel, has been spending heavily to attract and keep users in the competitive U.S. online sports betting and iGaming market. The strategy has helped FanDuel maintain a leading market share, but it comes at a cost: profits are being pushed further out as the company prioritizes player engagement over immediate earnings.
Oppenheimer trimmed its full-year U.S. revenue estimate by 2% and also cut longer-term profit expectations. The bank now forecasts lower EBITDA (earnings before interest, taxes, depreciation, and amortization) for 2026 and 2027. EBITDA is a common measure of a company's operational profitability, stripping out financing and accounting decisions to show how much cash a business generates from its core operations.
The price target cut reflects the bank's view that Flutter's shares may not rise as much as previously expected until the company shows clearer signs that its spending is translating into sustained profits.
Why DraftKings is getting more love
Oppenheimer noted that investors have been more favorable toward DraftKings, Flutter's main U.S. competitor. DraftKings has also invested heavily in growth, but its strategy appears easier for Wall Street to understand and model, according to the bank. That contrast is part of why Flutter's stock has struggled to gain traction despite its market-leading position.
Flutter's higher debt load adds another layer of complexity. The company has borrowed to fund its expansion, and with interest rates still elevated, that debt becomes more expensive. Investors are increasingly focused on how companies will manage their balance sheets in a higher-for-longer rate environment, as seen in broader market jitters over spending and cash flow.
Prediction exchanges: a potential catalyst
Oppenheimer sees prediction exchanges as the clearest path to changing sentiment around Flutter. Prediction markets allow people to bet on the outcomes of future events, from elections to sports championships. Flutter has been expanding into this space, and the bank believes it could provide a new growth avenue that investors haven't fully priced in.
The growing interest in prediction markets is highlighted by Kalshi's $40 billion valuation, which shows how these platforms are moving into Wall Street's mainstream. For Flutter, a successful push into prediction exchanges could differentiate it from DraftKings and offer a fresh catalyst beyond traditional sports betting.
What it means for investors
For everyday investors, the key takeaway is that Flutter's growth story is taking longer to translate into profits than some had hoped. The company is making a deliberate choice to prioritize market share and user engagement over short-term earnings, a strategy that can pay off in the long run but requires patience.
Wednesday's Q3 earnings report will be a critical test. Investors will be watching for signs that Flutter's spending is starting to moderate, or that revenue growth is accelerating enough to justify the continued investment. They'll also look for updates on the prediction exchange business and any changes to management's outlook.
Oppenheimer's note is a reminder that Wall Street's patience has limits. When a company's strategy is hard to model, as Flutter's appears to be, analysts and investors tend to become more cautious. That can weigh on the stock price even if the underlying business is performing well.
For those holding Flutter shares, the near-term picture may remain bumpy. But the company's leading position in the U.S. betting market and its potential in prediction exchanges offer reasons for optimism over a longer horizon. As always, it's important to consider your own investment goals and risk tolerance rather than reacting to a single analyst's note.
Flutter's results on Wednesday will likely provide more clarity on whether the company can balance growth and profitability, and whether the patience of Wall Street will be rewarded.
