Robinhood stock jumps 8% as company strikes deal to expand booming prediction markets business

Robinhood (HOOD) banal popped 8% connected Wednesday arsenic the trading level said it would grow its fastest-growing merchandise line, prediction markets.

Shares of the online broker jumped aft the institution announced the motorboat of a futures and derivatives speech with marketplace shaper Susquehanna International successful bid to grow its prediction-market offerings, a work wherever users tin stake connected outcomes ranging from sports results to Federal Reserve involvement complaint decisions.

Robinhood began offering prediction marketplace services past twelvemonth done a concern with Kalshi. Since the offering's launch, 9 cardinal contracts person been traded by much than 1 cardinal users, according to Robinhood.

Bernstein analysts said connected Wednesday that Robinhood volition apt proceed to administer Kalshi products, but the caller inaugural volition let the institution to supplement much lawsuit contracts directly.

Shares of Robinhood are up 215% twelvemonth to date, making it the second-largest gainer connected the S&P 500 (^GSPC) this year. The banal was added to the scale successful September.

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"With HOOD already accounting for much than 50% of Kalshi marketplace volumes, we believe, HOOD wants to leverage its organisation borderline to assertion a higher stock of the marketplace gross pool," Bernstein expert Gautam Chhugani and his squad wrote. The steadfast has a Buy standing connected the banal with a $160 terms target.

"HOOD’s progressive trader basal of 14 cardinal provides the cleanable demographic and merchandise marketplace acceptable for prediction markets, allowing it to marque much assertive powerfulness moves to seizure its rightful stock of the gross pool," added the analyst.

Bernstein estimates the level is connected gait to bring successful much than $300 cardinal from lawsuit contracts connected an annualized rate.

In the deal, Susquehanna volition service arsenic a liquidity provider, which is indispensable for terms stableness successful trading.

"By introducing a robust, institutional-grade speech to the market, we’ll adhd much choices for consumers. We’ll besides summation the flexibility to physique faster and present much contracts and services to traders," said Robinhood successful its announcement.

Ines Ferre is simply a elder concern newsman for Yahoo Finance. Follow her connected X astatine @ines_ferre.

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