<img style="background-color:#8d7161" alt="Robinhood Markets Inc. stock price rollercoaster ride provides more fuel for the meme stock debate” src=”https://s3.tradingview.com/news/image/invezz:aa709de31600c-7a298ab89b5e70b765a2d37441b5edce-resized.jpeg” role=”presentation” loading=”lazy” class=”image-gDIex6UB image-S5VA5POt”/>
Robinhood shares rose 4% after news that the platform will launch tradable contracts on the outcome of the US presidential election.
Kamala Harris and Donald Trump’s contracts should be available to US users starting today.
The derivatives the company plans to list will allow customers to buy and sell contracts that essentially represent speculation on the eventual winner of the election.
Although these contracts existed before, they have only become more important in recent years.
A turning point for Robinhood
There is already a gambling element integrated into Robinhood’s platform, which the company denies but has often come under criticism for.
Over three years ago, Robinhood was caught up in the GME meme hype. Its users began buying stocks of companies that had no fundamental strength and were trading solely on hype.
For many younger private investors, the platform became a get-rich-quick route: People proudly showed off how they bet their entire savings or salary on a particular stock.
As this meme hype spread to other stocks, it developed its own popular niche. People signed up for Robinhood because they could easily bet on companies.
If the regulations weren’t like that
Phew, in the USA Robinhood would have already become a gambling company. At least that was the kind of audience it attracted.
However, since gambling is still not mainstream in the USA, the company has to remain limited to the major capital markets.
However, that doesn’t mean Robinhood can’t diversify its business in the future. Contracts like those introduced for this year’s elections will eventually be used for other events.
Soon it will be the NFL, NBA and other major sporting events. Oscars, Nobel Prizes and the Olympic Games won’t be long in coming.
Robinhood has a large database of users who would like to bet on these events without having to sign up to a betting site.
This new niche could drive the company’s future growth.
Market favors Donald Trump
This election was one of the most volatile in recent history.
As a result, betting markets have attracted a lot of attention and money.
Betting trends before major events often reflect the final outcome.
Nevertheless, it can happen that the markets severely undervalue outsiders. This happened in 2016 when the clear favorite Hillary Clinton lost to Donald Trump.
Smart players pay attention to this tendency to misjudge.
As the election date approaches, punters have started betting heavily on Donald Trump, causing the odds to continue to rise in his favor.
Those who supported Donald Trump early in the race are sitting on their winnings, while Joe Biden’s opponents have already made money since he dropped out.
Kamala Harris may go into the election as an underdog in the betting world. But that doesn’t mean she can’t beat Trump.
The lower their chances of winning, the more worthwhile it is to bet on their success.
