Traders focused on the food industry had their eyes set on Domino’s Pizza as it released its fourth-quarter earnings on Monday morning. Anticipation among pizza enthusiasts and bullish investors was palpable, especially as Polymarket traders signaled confidence with a majority predicting an earnings beat. On the prediction market platform, 64% of contracts were betting that Domino’s would exceed the consensus earnings-per-share forecast of $5.38 for the final quarter of 2025.
These Polymarket traders were poised to profit from their “yes” contracts if Domino’s reported earnings of at least $5.39 per share. However, the results revealed that Domino’s had fallen short, with an EPS of only $5.35. As a result, those who had wagered on the “no” outcomes emerged victorious.
The interplay between prediction markets and controversy is becoming increasingly significant, especially as state officials scrutinize their alignment with sports wagering regulations. Despite this, there is rising hope among some investors that prediction markets could evolve into valuable tools beyond sports betting. The earnings reports from companies like Domino’s are providing more practical scenarios for market participants. For instance, investors without Domino’s shares who wished to capitalize on the earnings announcement could have purchased a “yes” contract, while those holding shares could hedge their positions by buying “no” contracts.
Moreover, bearish traders might find “no” contracts less risky than shorting the stock outright. While Domino’s missed its EPS estimate, the company did provide a more optimistic forecast for 2026 EPS, which surpassed Wall Street’s expectations, leading to a stock price increase following the announcement. Holders of “no” contracts could still profit from both their bet and the subsequent rise in the stock price.
A closer look at Domino’s performance reveals a mixed outlook from analysts. Some restaurant chains may gain from favorable conditions like reduced payroll taxes and increased tips. However, Morgan Stanley has recently downgraded Domino’s stock from overweight to equal weight, reducing its price target by 15%, indicating a challenging market narrative.
Interestingly, some institutional investors, including Berkshire Hathaway, displayed renewed interest in Domino’s, boosting their positions in the company during the last quarter of 2025.
As investors consider entering the pizza giant’s stock, they might want to reflect on insights from The Motley Fool’s Stock Advisor team, which has identified ten other stocks deemed more promising for current investment than Domino’s. Historically, stocks recommended by this advisory service have yielded impressive returns, outpacing the S&P 500 significantly.
In summary, while Domino’s fell short of EPS expectations, the subsequent rise in stock value combined with optimistically revised guidance indicates nuanced market dynamics at play. As traders navigate the complexities of prediction markets and institutional investing, the recent developments signify a significant chapter in the narrative surrounding Domino’s Pizza.
