DraftKings (DKNG +0.12%) is working to expand its sports betting business to include prediction markets. Discount broker Robinhood (HOOD 3.27%) is now offering prediction markets to its customers.
There's no question about it, prediction markets are hot. Which is why some investors may want to see privately held Polymarket go public in 2026.
Will it?
Image source: Getty Images.
Tesla's success led to an onslaught of EV IPOs
Tesla (TSLA 3.14%) was the first publicly traded company to exclusively build all-electric cars. It bled red ink for years before it became a sustainably profitable business. However, once Wall Street started getting excited about Tesla, private electric car makers came out of the woodwork looking for cash.
A lot of money was raised during this window of opportunity, with Rivian (RIVN 8.11%) and Lucid (LCID 7.87%) among the companies investors watch in the space today. However, they are only two of many EV companies that held an initial public offering or attempted to do so. This cash grab wasn't a unique event; it happens over and over again on Wall Street.
When an emerging sector is en vogue, young companies line up to IPO. Some additional recent examples include small modular nuclear reactors, vertical-lift short-haul electric aircraft, marijuana, and the current market darling, artificial intelligence. The businesses involved are doing the right thing, since it can be hard to tap the capital markets for cash. Doing so when investors are eager to give up their hard-earned savings is a no-brainer.
Be careful what you wish for
Prediction markets are hot right now, as noted above. Polymarket is most likely considering an IPO, and it is highly likely that Wall Street banks are talking to the company about it. It would make total sense for the privately held company to act while the fire is hot. If it waits too long, this window of opportunity could close.
NASDAQ: LCID
Key Data Points
The problem for investors is actually a bigger one: Is it worth buying into prediction market companies, including a potential Polymarket IPO? If history is any guide, the answer is likely to be no.
For example, Rivian and Lucid went public to great fanfare, but their stocks have declined dramatically since their IPOs and are far below their high-water marks. Worse, the EV space has seen a raft of bankruptcies, including Fisker, Nikola, and Lordstown Motors, among others.
Far too often, companies go public before they are really ready, just so they can capitalize on investor enthusiasm for a particular investment theme. And, over time, the weakest companies are weeded out. That's not to suggest that Polymarket won't be a successful company. However, you might find that, if Polymarket IPOs in 2026, waiting to buy it until after investors have moved on to other hot stories is a better long-term investment decision than getting caught up in the IPO hype machine.
