Compass Point Still Bullish on Robinhood, Citing Prediction Market Growth

Analysts at funding financial institution Compass Level imagine that Robinhood’s inventory will proceed to climb, pointing to prediction market development and income from crypto buying and selling charges and staking rewards.

Skilled sports activities are rising as a notable tailwind for Robinhood. When the retail brokerage studies third-quarter earnings subsequent month, Robinhood will seemingly say that income generated from prediction markets grew at a sooner price than income derived from processing clients’ transactions, the analysts wrote in a Monday observe.

Within the three months ended Sept. 30, prediction market income seemingly elevated 100% quarter-over-quarter to round $20 million, Compass analysts wrote. In the meantime, Compass analysts anticipate transaction income to extend 35% over the identical interval.



Within the U.S., folks sometimes spend extra time playing in autumn as skilled sports activities seasons for basketball and soccer start. Nonetheless, bettors are navigating a plethora of choices as prediction markets parallel the performance of some sportsbooks.

Robinhood will seemingly generate $50 million in fourth-quarter income “alongside a full quarter of NFL season,” the analysts wrote, whereas referring to America’s hottest pastime.

Robinhood started letting clients wager on NFL and school soccer video games in August via a partnership with prediction market Kalshi. Nonetheless, Robinhood presently gives prediction markets on different topics, equivalent to economics, tradition, and know-how.

Though Robinhood gives commission-free buying and selling on shares and cryptocurrencies, the agency prices clients a one cent payment on trades involving occasion contracts, the analysts wrote.

On Monday, Robinhood shares rose greater than 5% to almost $146, in line with Yahoo Finance. When the retail brokerage studies third-quarter earnings after markets shut on Nov. 5, analysts anticipate Robinhood to reveal earnings per share of $0.54 on $1.2 billion in income.

Compass Level maintained a “purchase” ranking in its newest HOOD observe, pointing to a $161 worth goal—raised from $105. If reached, that mark would characterize a brand new all-time excessive worth for Robinhood, beating the earlier document above $153 from earlier this month.

Robinhood’s prediction markets are gaining traction within the U.S., however the agency can also be talking with UK regulators about bringing them to new markets, Bloomberg reported final month.

Final 12 months, prediction markets had a breakthrough second within the U.S., as Polymarket and Kalshi processed billions of {dollars} of wagers on whether or not President Donald Trump would win re-election. Some mentioned the displaying solidified their utility as an alternative choice to political polls.

Robinhood provided entry to prediction markets with just a few weeks left within the presidential contest, following Kalshi’s authorized victory over the Commodity Futures Buying and selling Fee. 

The regulator had tried to dam Kalshi from providing contracts on the U.S. presidential election in courtroom for years, however its efforts had been unsuccessful. After pushing again in opposition to a federal choose’s ruling, the CFTC deserted efforts to enchantment the choice in Might.

In some methods, the obstacles between monetary companies companies and sports activities betting corporations are mixing. Final week, for instance, DraftKings tossed its identify into the prediction market ring, unveiling its acquisition of prediction market alternate Railbird.

(Disclosure: Decrypt’s mother or father firm, Dastan, is the proprietor of prediction market Myriad.)