Gemini Space Station Is Launching a Prediction Market. The Stock Soars. — Barrons.com
By Nate WolfShares of Gemini Space Station, the crypto platform founded by Cameron and Tyler Winklevoss, rose sharply Thursday after the company moved one step closer to its next offering: prediction markets.Affiliate Gemini Titan received a designated contract market license, or DCM, from the Commodity Futures Trading Commission, the company said. Customers in the U.S. soon will be able to participate in prediction markets on Gemini's web interface and mobile app.Prediction markets like Kalshi and Polymarket allow users to trade CFTC-regulated event contracts on yes-or-no questions. Traders can wager on everything from football games to the color of Federal Reserve Chairman Jerome Powell's necktie.Gemini stock popped 19% to $13.51 on Thursday. Shares have fallen more than 50% from their September initial public offering price of $28 apiece.Gemini Space Station first applied for a DCM license in March 2020. The company thanked the CFTC's more relaxed approach to crypto and financial regulation under Acting Chairman Caroline D. Pham and President Donald Trump for the long-awaited win."It's incredibly refreshing and invigorating to have a president and a financial regulator who are pro crypto, pro innovation, and pro America, " said CEO Tyler Winklevoss.The announcement came the same day Pham announced that Tyler Winklevoss will be on CFTC's CEO Innovation Council, which "will engage in public discussion of market structure developments in derivatives markets." Executives from Polymarket, Kalshi, Bullish, Nasdaq, and other exchanges and crypto platforms are also on the council.Major players across the crypto and finance ecosystem are rushing into prediction markets amid the positive signals from Washington.Robinhood Markets has unveiled a series of prediction-market and futures offerings this year, including a recent joint venture with Susquehanna International Group. Brokerages like Interactive Brokers and Webull have introduced prediction-market offerings, too. And New York Stock Exchange owner Intercontinental Exchange took a $2 billion stake in Polymarket in October.But prediction markets are still developing as a business model, and players like Gemini Space Station face growing competition, analysts at Evercore ISI argued in a research note Thursday. The firm reiterated an Outperform rating and $15 price target on the stock."While the approval is definitely positive for potential user growth and brand positioning, we see a more gradual revenue ramp," the Evercore analysts wrote.Write to Nate Wolf at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.