A recent survey conducted by Japanese investment bank Mizuho suggests that Robinhood (HOOD) could experience greater revenue growth from prediction markets compared to its rival, Coinbase (COIN). Analysts Dan Dolev and Alexander Jenkins emphasized this potential in their Tuesday report, highlighting that Robinhood users are more likely to invest additional cash into prediction markets rather than liquidate existing holdings.
The survey involved over 230 users of both platforms and revealed that participation in prediction markets among these users is significantly higher than that of typical investors. Activities predominantly centered around economic and political events were reported to be the most popular, with 81% and 49% interest levels, respectively. Sports events also garnered considerable attention, attracting 47% of respondents.
One key difference drawn between the two platforms pertains to how users plan to finance their prediction market trades. Approximately 50% of Robinhood participants indicated they intend to use fresh capital for these trades, while only a small fraction of respondents stated they would sell off their traditional portfolios or cryptocurrency, with figures at 12% and 10% respectively. Conversely, Coinbase users mostly reported selling crypto assets (37%) or adding new funds (37%) as their primary means of financing trades. This reliance on selling existing assets presents a risk for Coinbase, as it could undermine the company’s existing crypto trading revenue.
The differing funding strategies are expected to provide Robinhood with a more pronounced medium-term revenue boost, despite Coinbase users’ intention to allocate a slightly larger portion of their portfolios to prediction markets in the coming year (15% for COIN users compared to 13% for HOOD users). Mizuho estimates that Robinhood’s prediction market segment could achieve a $300 million run rate in the fourth quarter, supported by a staggering 2.5 billion contracts expected to be executed in October. Consequently, the bank has raised its revenue forecasts for Robinhood by 6%–7% for the years 2026-2027 and maintained its outperform rating, with a price target of $172.
In contrast, Coinbase is set to launch its own prediction-market product, anticipated to debut on Wednesday. While Mizuho views this as a positive move, they have indicated that it is not sufficient to adjust their current projections significantly. Concerns regarding the final product’s design and the economic implications tied to crypto selling for funding prediction trades have led Mizuho to not include potential benefits from prediction markets in its Coinbase revenue models. Additionally, the bank pointed to disappointing fourth-quarter trends and lower bitcoin prices as reasons for lowering its price target for Coinbase from $320 to $280, reaffirming a neutral rating on the stock.
In early trading, Robinhood shares saw a 2.6% increase, reaching $122.53, while Coinbase’s stock rose by 2%, pricing at $257.63. The evolving landscape of prediction markets is attracting attention as a new asset class, poised to reshape investment strategies and revenue models across platforms.
