Coinbase and Robinhood's Secret to Growth: Prediction Markets

According to Cantor Fitzgerald analyst Ramsey El-Assal, prediction markets are emerging as a promising area of growth for Coinbase and Robinhood, as investors shift their attention from a disappointing first quarter for crypto trading to future products. El-Assal noted that investors are increasingly viewing quarterly results as backward-looking and are instead focusing on forward-looking demand trends and the product roadmap, including newer offerings such as prediction markets. Both companies are expected to report weaker results for the first quarter of 2026 due to a decline in crypto prices and trading activity. Despite this, El-Assal maintained an 'overweight' rating on both stocks and raised his price targets, citing improving sentiment and long-term growth drivers. The analyst expects Robinhood to face similar near-term pressure, but believes that the company's business model provides some cushion. Crypto revenue quality may come under pressure due to the platform's tiered pricing structure, which earns lower yields on large active traders and higher yields on marginal traders. However, both stocks have rallied in recent weeks, with Coinbase shares up about 18% quarter-to-date and Robinhood climbing roughly 40% in April. The focus is now on what comes next, with investors watching regulatory developments and new business lines, including prediction markets. Cantor maintained an 'overweight' rating on Robinhood and raised its price target to $110. The broader view is that while current trading trends remain tied to crypto price cycles, the next phase of growth will depend more on product expansion and new use cases. However, the legality of prediction markets is currently a topic of debate, with the New York Attorney General's office filing a lawsuit against Coinbase and Gemini over their prediction market offerings, alleging that they are actually gambling products.