CME Group Inc. (CME): A Bull Case Theory

Core Thesis - CME Group Inc. is experiencing mixed financial results, with a focus on strategic initiatives and potential growth opportunities despite recent revenue declines [2][3][4]. Financial Performance - Total net revenue for Q3 2025 was $1.54 billion, down 9% sequentially and 3% year-over-year, primarily due to weaker clearing and transaction fees [2]. - Adjusted EPS was $2.68, flat year-over-year but 2% above consensus, supported by stronger non-operating income of $214 million [3]. - Trading volumes softened, with total futures and options average daily volume (ADV) down 16% quarter-over-quarter to 25.3 million [3]. Cost Management - Management lowered its full-year expense guidance by $10 million to $1.625 billion, citing reduced costs related to Google migration and professional services [4]. Strategic Initiatives - CME is prepared to support FanDuel-related prediction markets pending regulatory approval and is cautious about certain election contracts [5]. - The company is working with Google on tokenization of cash for collateral, enabling 24/7 trading infrastructure [5]. - CME announced a 3.5% increase in market data pricing effective January 2026 [4]. Market Position - CME Group's stock price was $278.99 as of December 1st, with trailing and forward P/E ratios of 27.03 and 24.10 respectively [1]. - The company is not among the 30 most popular stocks among hedge funds, with 75 hedge fund portfolios holding CME at the end of Q2, up from 73 in the previous quarter [7].