Robinhood Markets (HOOD, Financial) surged to a new 52-week high, climbing over 70% since early August. This rise follows the announcement of new presidential election event contracts. These contracts, launching today, will not impact Q3 earnings, set to be released on October 30.
- HOOD's election betting mirrors Interactive Brokers (IBKR, Financial), which launched Forecast Contracts earlier this month. IBKR has seen strong demand and momentum since introducing these election-focused contracts.
- During IBKR's Q3 earnings call, it was noted that the ForecastEx business saw increased volume post-election contract launch, with primary interest from U.S. clients. There's potential for further growth through international expansion.
- HOOD's event contracts allow trading on specific outcomes, such as election results. With the U.S. presidential election approaching, these contracts are currently available to a limited customer base, likely not impacting Q4 growth significantly.
- The event contracts could drive future growth, offering more than just election outcomes. HOOD views them as a tool for real-time decision-making, introducing a new asset class.
Although not affecting Q3 results, HOOD's event contracts could attract more users. The company also plans to launch futures trading, aiming to expand its user base. By keeping its platform updated with new features, HOOD is positioning itself for long-term success.
