From 24/7 Wall St. · Jake FitzGerald · · 50s
Polymarket Beats Wall Street on Earnings
Online bettors outperform Wall Street analysts in earnings predictions by 35 points.
In brief
Online bettors outperform Wall Street analysts in earnings predictions by 35 points. Polymarket bettors correctly predicted quarterly earnings 78.5% of the time versus Wall Street analysts' 43.7% accuracy. Originally reported by 24/7 Wall St..
Prediction Accuracy Gap
Polymarket bettors predicted earnings right 78.5% of the time.
“Polymarket bettors called quarterly earnings correctly 79% of the time”
Analyst Consensus
Wall Street analysts managed earnings predictions 43.7% of the time.
“Wall Street analyst consensus was right 44% of the time”
Study Source
Daniel Rabetti, Jiaqi Shao and Che Zhang conducted the research.
“Beating the Earnings Game, a study by Daniel Rabetti, Jiaqi Shao and Che Zhang”
Prediction Market Mechanics
Real money bets update continuously as earnings approach.
“Traders buy and sell contracts at any time before the report”
Analyst Incentives
Analysts face pressure to stay optimistic to preserve relationships.
“Sell-side analysts face pressure to stay optimistic to preserve access to company management”
Walk-Down Strategy
Companies lower expectations before earnings reports.
“Management sets an expectation early in the quarter, then steers analysts toward a number the company is confident it can clear”
Crowd Advantage
Diverse groups outperform analysts on company-specific factors.
“The crowd’s edge was largest for companies whose earnings are driven by company-specific factors”
What This Means
Focus on forward guidance, not consensus beats.
“What matters is the size of the beat, the quality of the revenue underneath it, and above all the forward guidance”
The main idea
Polymarket bettors correctly predicted quarterly earnings 78.5% of the time versus Wall Street analysts' 43.7% accuracy.
