Coinbase and Robinhood Turn to Prediction Markets for Future Growth

The growth prospects of Coinbase and Robinhood are now heavily focused on prediction markets, according to Cantor Fitzgerald analyst Ramsey El-Assal, as investors move beyond the first quarter's weak crypto trading performance. El-Assal noted that investors are now looking at forward-looking demand trends and the product roadmap, including newer offerings such as prediction markets. Both companies are anticipated to report softer results for the first quarter of 2026 due to a decline in crypto prices and trading activity. Bitcoin and ether prices fell by about 23% and 29% in the quarter, which negatively impacted trading volumes across exchanges. Despite this, El-Assal maintained an 'overweight' rating on Coinbase and raised his price target to $250, citing improving sentiment and long-term growth drivers. Robinhood also faces near-term pressure, with the analyst expecting a decline in trading volumes due to softer market conditions and a hit to net interest revenue from lower rates. However, the company's business model provides some cushion, with higher volatility potentially lifting trading margins. Crypto revenue quality may come under pressure due to the platform's tiered pricing structure. 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. Coinbase's prediction markets offering, launched this year, has attracted meaningful interest, according to El-Assal. Robinhood is also focusing on prediction markets, alongside other initiatives such as tokenization and private market access. 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 regulatory environment for prediction markets is uncertain, with a recent lawsuit filed by the New York Attorney General's office against Coinbase and Gemini over their prediction market offerings, alleging that the products are actually gambling products and therefore in violation of state regulations.