In a market frenzy described by analysts as &#34;casino-like,&#34; the retail trading platform Robinhood is reaping astonishing returns from speculation activities that far exceed traditional stocks. Its latest financial report reveals a new growth point that is exploding: prediction markets.
On Wednesday after the market closed, Robinhood announced that its third-quarter revenue doubled to a record $1.27 billion, with net profit exceeding three times that of the same period last year, reaching $556 million. The strong performance was primarily driven by trading outside of stocks, and under the loose regulatory environment and encouragement of speculation fostered by the Trump administration, the company's stock price has soared about 450% since the 2024 election.
Among the impressive financial results, a small but rapidly growing business segment stands out. Nearly 90% of trading revenue comes from non-stock trading such as options and cryptocurrencies, with approximately $25 million coming from its emerging prediction market platform. This indicates that betting on events ranging from sports to political elections is moving from niche to mainstream and becoming a new source of revenue for financial platforms.
This trend is not unique to Robinhood but is a microcosm of the entire industry. According to analysts at Piper Sandler, the trading volume on prediction market platforms Kalshi and Polymarket nearly doubled in October. This widespread speculative mentality is permeating all aspects of the economy, blurring the lines between investment and gambling, and having a profound impact on the market and investors.
<h2>Betting on Everything: Robinhood's Prediction Market Landscape</h2>
The prediction market business is rapidly becoming an important part of Robinhood's diversification strategy. Through a partnership with the platform Kalshi, Robinhood allows users to buy and sell contracts on the &#34;yes&#34; or &#34;no&#34; outcomes of future events, essentially turning real-world events into tradable financial products. Although the current revenue of approximately $25 million accounts for only a small portion of its total revenue, its explosive growth potential cannot be ignored.
Robinhood CEO Vlad Tenev revealed on social media platform X that the cumulative trading volume of event contracts in its prediction market has surpassed 4 billion, contributing over 2 billion in just the third quarter. He candidly stated, &#34;This is just the beginning.&#34;
To capitalize on this trend, Robinhood has rapidly expanded the types of tradable events from the initial focus on sports and finance to include politics, entertainment, and technology. Users can now not only predict the year-end level of the S&amp;P 500 index but also bet on who will be named Time magazine's Person of the Year, which movie will receive an Oscar nomination, and even the number of annual launches by SpaceX. Reports indicate that Robinhood executives have expressed an open attitude towards acquiring companies in the prediction market space, highlighting their ambitions in this area.
<h2>Policy &#34;Green Light&#34;: A Breeding Ground for Speculation in the Trump Era</h2>
Robinhood's rise is closely tied to the current market environment. Since Trump won the election last November, Robinhood's stock price has increased by about 450%, far exceeding the 17% rise of the S&amp;P 500 during the same period, making it one of the biggest winners among large-cap companies
According to an analysis by Bloomberg, multiple policies of the Trump administration have fueled this wave of speculation.
On one hand, the President's public support for the cryptocurrency industry, the signing of legislation that legalized stablecoins, and the executive order expanding government oversight of digital asset usage have directly benefited cryptocurrency trading platforms like Robinhood. On the other hand, the market volatility triggered by global trade disputes has attracted a large number of traders hoping to profit from it. For example, in April, when tariff prospects changed rapidly, the stock trading volume on the Robinhood platform surged 123% year-on-year.
More fundamentally, a broader atmosphere of regulatory relaxation and encouragement of speculation is taking shape. According to an analysis by The Wall Street Journal, Washington has not only failed to curb this wave of speculation but has instead been &#34;stepping on the gas.&#34; A typical case is the Intercontinental Exchange (ICE), the operator of the New York Stock Exchange, which made an investment of up to $2 billion in the prediction market platform Polymarket, with Donald Trump's venture capital firm also being one of the investors in the platform.
This is interpreted as a bet by capital on &#34;the speculation industry itself,&#34; and it reflects the close ties between politics, capital, and speculation. As Accuvest Chief Investment Officer Eric Clark stated, &#34;The market as a whole is becoming more and more like a casino, and Robinhood is a direct beneficiary of this market.&#34;
<h2>Market Concerns: Is it the &#34;New Normal&#34; or the Eve of a Bubble?</h2>
Despite its impressive performance, Robinhood and the market frenzy it represents are facing increasing scrutiny and doubts. Its soaring stock price has pushed valuations to high levels; as of Tuesday's close, its price-to-earnings ratio was about 62 times, far above the average of 22 times for similar platforms. This makes the company exceptionally sensitive to any underwhelming performance.
Some analysts express concerns about whether this growth driven by cyclical enthusiasm can be sustained. Charles Bendit, an analyst at Rothschild &amp; Co Redburn, is the only analyst tracked by Bloomberg to give the company a &#34;sell&#34; rating. He believes that &#34;Robinhood's fundamentals reflect the strength of the cycle, but its valuation suggests that the business has yet to prove its cross-cycle durability.&#34; Jay Woods, Chief Market Strategist at Freedom Capital Markets, raises a critical question: &#34;How much good news has already been priced in?&#34;
These concerns echo warnings from institutions like the International Monetary Fund (IMF). The IMF pointed out in its semi-annual Financial Stability Report that &#34;risk asset prices are far above fundamentals, increasing the likelihood of disorderly adjustments.&#34; When a nationwide speculative mentality combines with loose monetary policy and relaxed financial regulation, the fragility of the entire system is amplified. For investors, distinguishing between structural market evolution and irrational bubble euphoria is becoming more critical and challenging than ever

HOOD

Robinhood's revenue in the third quarter doubled to a record $1.27 billion, with the prediction market business contributing approximately $25 million. The platform now allows users to bet on various events, including the year-end S&P 500 level and Oscar awards, achieving "everything can be bet on." The cumulative trading volume of event contracts has surpassed 4 billion. The prediction market is experiencing explosive growth, with Piper Sandler estimating that the October trading volume of peer platforms Kalshi and Polymarket has nearly doubled. Benefiting from the loose regulatory environment created by the Trump administration, 90% of Robinhood's revenue comes from options, cryptocurrencies, and other non-stock trades, marking that the speculative model of "betting on everything" is becoming a new growth engine for financial platforms

- Robinhood's recent financial report reveals a significant surge in revenue, doubling to $1.27 billion in Q3, driven largely by non-stock trading activities, including a burgeoning prediction market.  
- The company's stock has soared approximately 450% since the 2024 election, reflecting a broader trend of speculative trading fueled by a favorable regulatory environment under the Trump administration.  
- However, concerns about sustainability arise as Robinhood's high valuation, with a price-to-earnings ratio of 62, raises questions about the longevity of its growth amid increasing scrutiny and potential market corrections.

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