Compass Point Still Bullish on Robinhood, Citing Prediction Market Growth

Analysts at funding financial institution Compass Level consider that Robinhood’s inventory will proceed to climb, pointing to prediction market progress 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 reviews third-quarter earnings subsequent month, Robinhood will seemingly say that income generated from prediction markets grew at a quicker charge than income derived from processing prospects’ transactions, the analysts wrote in a Monday notice.

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 count on transaction income to extend 35% over the identical interval.



Within the U.S., folks usually 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 prospects wager on NFL and faculty soccer video games in August by a partnership with prediction market Kalshi. Nonetheless, Robinhood presently provides prediction markets on different topics, corresponding to economics, tradition, and know-how.

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

On Monday, Robinhood shares rose greater than 5% to just about $146, in response to Yahoo Finance. When the retail brokerage reviews third-quarter earnings after markets shut on Nov. 5, analysts count on Robinhood to reveal earnings per share of $0.54 on $1.2 billion in income.

Compass Level maintained a “purchase” score in its newest HOOD notice, pointing to a $161 value goal—raised from $105. If reached, that mark would symbolize a brand new all-time excessive value for Robinhood, beating the earlier report 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 yr, 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 stated the displaying solidified their utility as a substitute for political polls.

Robinhood supplied 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 decide’s ruling, the CFTC deserted efforts to enchantment the choice in Could.

In some methods, the boundaries between monetary providers companies and sports activities betting firms are mixing. Final week, for instance, DraftKings tossed its title into the prediction market ring, unveiling its acquisition of prediction market change Railbird.

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