Robinhood shares (NASDAQ:HOOD) rose more than 10% yesterday (Wednesday) after the retail brokerage announced plans to launch its own futures and derivatives exchange, deepening its push into prediction markets, which has become the company's fastest-growing revenue stream.
Previously, the fintech had expanded its services through Kalsi, generating more than 50 percent of the platform's trading volume. By launching its own exchange, Robinhood will be able to list contracts directly, rather than relying solely on the distribution of Kalsi products.
The brokerage firm has partnered with Susquehanna International Group to acquire a 90% stake in MIAXdx, the derivatives platform formerly known as LedgerX. Miami International Holdings, which currently owns the exchange, will retain a 10% interest in the business. Robinhood will manage the new entity and Susquehanna will provide liquidity from day one.
The stock rose nearly 11% to close at $128.20, the highest in the S&P 500 on Wednesday. The stock is up 215% this year, making it the second-best performer in the index.
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Robinhood stock appears to be consolidating near its all-time high of $154, which it tested in early October. A breakout above the 50-day EMA could give the company room to retest that level.
Robinhood shares technical analysis. Source: Tradingview.com
Users bet on everything from NFL games to Fed decisions
Robinhood launched its prediction market agreement in March through a partnership with Carsi, just before the NCAA Basketball Tournament. Users can now bet on a variety of outcomes, from sports outcomes to the movement of Federal Reserve interest rates.
Since its launch, more than 9 billion contracts have been traded and more than 1 million customers have joined the platform. The company reported that 2.3 billion event contracts were traded in the third quarter alone, more than double the number from the previous quarter.
“Robinhood is seeing strong customer demand for prediction markets, and we're excited to build on that momentum,” said JB McKenzie, general manager of futures and international at Robinhood.
Streets see windfall income from gambling boom
Bernstein analysts estimate that Robinhood's prediction markets business is on track to generate more than $300 million in annual revenue. The company maintains a buy rating and a $160 price target, the highest on Wall Street.
become violent
“HOOD already accounts for more than 50% of Kalsi market volume, and we believe HOOD wants to leverage its distribution advantage to capture a higher share of the market revenue pool,” Bernstein analyst Gautam Chughani wrote on Wednesday.
The new exchange will allow Robinhood to list and clear contracts directly, rather than relying solely on its partnership with Kalsi. Cantor Fitzgerald analysts noted that the CFTC license obtained through MIAXdx will also allow the company to offer traditional futures and options products.
Rivals compete to capture a growing market
The move comes as prediction markets are receiving increasing interest from both crypto and fintech companies. Kalsi recorded $4.47 billion in trading volume last month, while rival Polymarket reported $3.58 billion.
Crypto.com recently launched its own prediction market with plans to integrate Trump Media, and Gemini has also applied for regulatory approval to launch a similar marketplace. According to reports, Coinbase is also considering entering this space.
The exchange is scheduled to begin operations in 2026 after the MIAXdx acquisition is completed. Robinhood plans to make the platform available to other brokerages as well as its own customers.
