There’s a New Way to Play Quarterly Earnings With Polymarket’s Latest Rollout

There’s a new way to make a buck on companies’ earnings reports—and in some ways, this one may be the most straightforward.

Predictions marketplace Polymarket last week rolled out a new category of contracts that lets users put money on whether or not a company will beat Wall Street’s expectations. It’s a departure from what could be considered the traditional methods involving stocks and derivatives, but it’s also a simplified way for people to profit from publicly-traded companies’ bottom lines.

A handful of well-known companies, including Micron Tech (MU), CarMax (KMX), and Costco (COST), are due to report in the coming weeks, and Polymarket has contracts for all of them. Here’s how the new offering will work: Users can bet on the question of whether Costco will beat its quarterly estimate for earnings per share. At recent prices, a “yes” bet costs 79 cents and a “no” is 22 cents, indicating that the latter is seen as less likely.

That means a winning $100 wager could result in a net profit of $21 on a beat, or $78 on a miss. Bloomberg’s consensus estimates are used to determine wins and losses; if earnings aren’t reported as scheduled, and don’t land within 45 days, the contract is resolved as a “no.” (If the earnings match estimates, it’s a loss.) A wrong bet leaves you with nothing.

There’s a Range of Ways for Investors to Play Earnings

There are, of course, other ways to go about this.

One could trade a company’s stock—long or short—or associated call and put options ahead of earnings reports, but those aren’t so much direct bets on the results as tied to price movements that could be driven by the company’s forward guidance, how optimistic or pessimistic management sounded during its earnings call, the earnings themselves, or other factors.

When buying the stock, of course, you also own an asset that, broadly speaking, can be held as long as desired. Other prediction markets, like Kalshi, offer contracts on what might be mentioned on a company’s earnings call, but not one specifically for earnings beats.

Polymarket’s new contracts are part of a broader trend marrying moneyed matters with social media. The prediction market platform launched the earnings report bets as they partnered with StockTwits, where users of the finance-focused social media platform will be able to view the probabilities of market-moving events on Polymarket directly in its app.

Polymarket contracts aren’t yet available in the U.S., though that seems to be moving closer to reality. The company is in the middle of a comeback in the U.S. after the the Commodity and Futures Trading Commission and Justice Department ended a probe into the company without filing charges.

Polymarket did not respond to Investopedia’s request for comment on the timing of its U.S. launch in time for publication.

“Polymarket has been given the green light to go live in the USA by the @CFTC. Credit to the Commission and Staff for their impressive work. This process has been accomplished in record timing,” Shayne Coplan, chief of Polymarket, said on social media in reference to the regulator’s no-action letter on events contracts earlier this month.