Compass Point Still Bullish on Robinhood, Citing Prediction Market Growth

Core Insights - Analysts at Compass Point predict continued growth for Robinhood's stock, driven by the expansion of prediction markets and revenue from crypto trading fees and staking rewards [1] - Professional sports are identified as a significant factor contributing to Robinhood's revenue growth, particularly in the upcoming third-quarter earnings report [2] Revenue Growth - Prediction market revenue is expected to have increased by 100% quarter-over-quarter to approximately $20 million for the three months ending September 30 [3] - Transaction revenue is anticipated to rise by 35% during the same period [3] - Robinhood is projected to generate $50 million in revenue for the fourth quarter, benefiting from a full quarter of NFL season [4] Market Dynamics - The autumn season typically sees increased gambling activity in the U.S. due to the start of basketball and football seasons, with prediction markets offering alternatives to traditional sportsbooks [3] - Robinhood has partnered with prediction market Kalshi to allow customers to wager on NFL and college football games, while also offering markets on various other topics [4] Financial Performance - Robinhood shares rose over 5% to nearly $146, with expectations for third-quarter earnings per share of $0.54 on $1.2 billion in revenue [5] - Compass Point has raised its price target for Robinhood to $161, up from $105, indicating potential for a new all-time high [6] Regulatory Developments - Robinhood is in discussions with UK regulators to expand its prediction markets into new markets, indicating a strategic move for international growth [6]