After months of steady selling and an acceleration since early January, shares of Flutter Entertainment plc (NYSE: FLUT) are now back at the levels they were at in 2020. The stock has effectively given up three years’ worth of gains, a brutal outcome for what was once viewed as one of the most exciting names in global online gambling.
This has not been a single-event collapse. Rather, it's been a grinding loss of confidence as investors reassess competition, profitability, and long-term potential. The result is an ugly-looking chart that is beginning to attract some contrarian attention. Is there an argument that the worst-case scenario is now priced in? Let’s take a closer look.
Why the Selloff Has Been So Severe
The drivers behind the multi-month decline are many and varied. First, investors are increasingly concerned about the rise of pure prediction market players and what that could mean for Flutter’s core sportsbook business. The fear is not just competition, but margin pressure and a potential shift in how betting markets operate.
Second, there is lingering frustration around Flutter’s path to consistent profitability, something many tech companies are facing right now.
Despite strong top-line growth, the market has grown impatient with the lack of clear timelines and visibility on when scale turns decisively into earnings leverage.
Third, competition remains fierce. Rivals such as DraftKings Inc. (NASDAQ: DKNG) continue to spend aggressively, keeping acquisition costs elevated and limiting the potential for margins to expand.
Put together, it’s perhaps not all that surprising that investors have been spooked.
Why This Might Be the Falling Knife Worth Catching
However, the current risk/reward profile is starting to look attractive. From a technical perspective, Flutter is deeply oversold, with momentum indicators at extreme levels. The stock is also sitting around a major long-term support zone near $150, a level that has historically attracted buyers. These conditions don’t guarantee there’ll be a full reversal, but they do increase the likelihood of selling pressure exhausting itself soon.
Fundamentally, the business is stable. Core revenue engines remain healthy, particularly in its US iGaming segment, which continues to grow strongly year over year. That segment provides a more stable and higher-margin foundation, and is becoming an increasingly important part of the bullish long-term thesis.
Flutter is also making strategic investments in prediction markets rather than ignoring the threat. While those initiatives add uncertainty in the short term, they should ultimately help the company defend market share and participate in the evolution of the industry rather than being disrupted by it. The key question now is whether the worst-case scenario is already priced in. After a 50% drawdown and a return to 2020 prices, it’s a fair question to be asking.
Analysts Are Still Backing the Long-Term Story
While the market has been ruthless, analyst support has held up far better than the share price would suggest. Recent weeks have seen Buy ratings reiterated by firms such as Canaccord Genuity, Stifel Nicolaus, Oppenheimer, and Barclays, to name just a few.
Fresh price targets from this group extend as high as the low $300s, implying substantial upside potential considering the stock is currently trading below $150.
The common thread among the bulls is far from a denial of near-term challenges. Instead, they point to Flutter’s global scale, diversification across markets, and long-term growth prospects in regulated online gambling.
Improved visibility around its prediction market initiatives is also seen as a potential catalyst for restoring confidence.
Whenever there’s a contrast of that scale between analysts and the market, that’s exactly when the contrarians start to get interested.
How to Think About Flutter From Here
For the moment at least, this is not quite the clean dip-buying setup investors might be hoping for. The concerns around competition and profitability are real, and Flutter still has work to do to prove it can fully capitalize on what is becoming a massive market opportunity.
At the same time, the stock feels like its priced to fail. With technicals washed out, support being tested, and sentiment extremely negative, the conditions are in place for a sharp recovery if the selling pressure fades. If Flutter stock can show signs of being willing to consolidate above $150, the setup could quickly shift from being a falling knife to high-risk, high-reward recovery play.
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The article "Is Flutter Entertainment a Falling Knife—or a Rare Contrarian Setup?" first appeared on MarketBeat.
