Coinbase and Robinhood Turn to Prediction Markets for Future Growth

A new growth area is emerging for Coinbase and Robinhood, as investors look beyond the weak first quarter for crypto trading and focus on future products, including prediction markets, according to Cantor Fitzgerald analyst Ramsey El-Assal. El-Assal noted that investors are increasingly viewing quarterly results as outdated, instead focusing on forward-looking demand trends and product roadmaps. Both companies are expected to report softer first-quarter results due to a decline in crypto prices and trading activity. Despite this, Cantor estimates that improving sentiment and long-term growth drivers will support the stocks. Robinhood faces similar near-term pressure, but its business model provides some cushion, and the company is also exploring prediction markets and other initiatives. Regulatory developments and new business lines are key areas of focus for Coinbase, while Robinhood is leaning into prediction markets, tokenization, and private market access. Cantor maintained an 'overweight' rating on both stocks and raised its price targets. The analyst believes that while current trading trends are tied to crypto price cycles, the next phase of growth will depend on product expansion and new use cases. However, the regulatory environment for prediction markets remains uncertain, with a recent lawsuit filed against Coinbase and Gemini over their prediction market offerings, alleging that these products constitute gambling and violate state regulations.