Coinbase and Robinhood Harness Prediction Markets for Future Growth

The growth prospects of Coinbase and Robinhood are increasingly tied to emerging areas such as prediction markets, as investors look beyond the disappointing first quarter for crypto trading, says Cantor Fitzgerald analyst Ramsey El-Assal. El-Assal notes that investors are now focusing on forward-looking demand trends and the product roadmap, which includes newer offerings like prediction markets. Despite expectations of softer results for the first quarter of 2026 due to a decline in crypto prices and trading activity, both companies are poised for long-term growth driven by innovative products. Cantor estimates that Coinbase's consumer and institutional trading volumes will be $35 billion and $167 billion, respectively, with exchange revenue below consensus. However, El-Assal maintains an 'overweight' rating on the stock and raises his price target to $250, citing improving sentiment and growth drivers. Robinhood also faces near-term pressure but is expected to benefit from higher volatility and stronger yields in equities and options. The company's business model provides a cushion, with crypto revenue quality potentially under pressure due to its 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 regulatory developments, new business lines, and prediction markets, which have attracted meaningful interest. Robinhood is also exploring prediction markets, tokenization, and private market access, which could drive future growth. Cantor maintains an 'overweight' rating on Robinhood and raises its price target to $110. The broader view is 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 by the New York Attorney General's office against Coinbase and Gemini over their prediction market offerings, alleging that these products are actually gambling products and therefore violate state regulations.