Coinbase and Robinhood Pin Growth Hopes on Emerging Prediction Markets

The growth prospects of Coinbase and Robinhood are increasingly tied to the potential of prediction markets, according to Cantor Fitzgerald analyst Ramsey El-Assal, as investors look beyond a disappointing first quarter for crypto trading. El-Assal notes that investors are shifting their focus from the recent quarterly results to future demand trends and the product roadmap, which includes newer offerings such as prediction markets. Both companies are expected to post softer first-quarter results due to a decline in crypto prices and trading activity, with bitcoin and ether falling 23% and 29% respectively. Despite this, Cantor estimates that while Coinbase's consumer and institutional trading volumes will be below expectations, the company's improving sentiment and long-term growth drivers justify an 'overweight' rating and a raised price target of $250. Similarly, Robinhood faces near-term pressure but its business model provides some cushion, with higher volatility potentially lifting trading margins. The company's efforts to expand into prediction markets, alongside other initiatives, could drive future growth. Cantor has maintained an 'overweight' rating on Robinhood and raised its price target to $110. The analyst believes that while current trading trends are still 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 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 they constitute gambling products.