By Nick Devor
Quarterly corporate earnings calls are highly scripted and closely scrutinized by Wall Street traders. An offhand comment from an executive can send company shares soaring or sinking. Costco Wholesale's fourth-quarter call in September was no different, with stock market analysts listening for clues from CEO Ron Vachris about the retailer's future.
Meanwhile, prediction-market trader Nate Meininger needed to hear just two words: "hot dog."
Meininger had a position on a so-called mention market, a type of prediction market where traders can predict specific words said by a speaker during an event. He'd bet $170 that Vachris would say "hot dog," and stood to win $600.
After noting an 8% year-over-year increase in net sales and a record year for Costco's gas station business, Vachris added that the company "also recently celebrated a few milestones, including the fortieth anniversary of our $1.50 hot-dog-and-soda combo." Despite the positive numbers, Costco stock dropped 2.9% the following day -- but Meininger booked a 253% profit on his trade.
Meininger is just one of many traders preparing for a busy earnings season as prediction markets provide investors new ways to trade company performance beyond buying and selling stock. According to his public account on the prediction market Kalshi, Meininger has made $60,000 trading on mention markets and another $21,000 predicting corporate data, such as how many vehicles Tesla will deliver in a quarter.
A range of corporate data reported in upcoming earnings releases are tradable on prediction markets, from Spotify's monthly active user count to total employees at Meta. Outcomes that could impact company share prices can be traded as well, like who the next CEO of Apple will be.
Prediction markets are also diving into the more traditional earnings season game -- tracking beats and misses. An earnings calendar on prediction market Polymarket asks: "Will JPMorgan Chase beat quarterly earnings?" Traders can take the yes or no on all the key fourth-quarter reports that kick off this week.
The event contracts sold on prediction markets offer a clean way to trade a firm's financial results, since stock moves following an earnings release can be unpredictable. As with Costco's September results, an earnings beat doesn't guarantee a jump in share prices.
Thus far, though, earnings-specific trades are generating less interest -- and less dollar volume -- than the mention markets.
A recent Polymarket contract asking "Will Jefferies Financial Group beat quarterly earnings?" saw $37,516 in trading volume. By comparison, $3.4 million has been traded on whether President Donald Trump will acquire Greenland by the end of the year.
The most popular trade on Polymarket right now relates to sports: $662 million has been bet on this February's Super Bowl.
Market participants increasingly see prediction markets as vital signals for investors to consider when purchasing company stock or weighing other investments.
International Continental Exchange, the parent company of the New York Stock Exchange, invested $2 billion in Polymarket last year. "Our partnership with ICE marks a major step in bringing prediction markets into the financial mainstream," Polymarket CEO Shayne Coplan said in a press release announcing the investment.
Robinhood Markets, meanwhile, is offering Kalshi's prediction markets on its brokerage app.
Polymarket has a data partnership with Dow Jones, the publisher of Barron's.
Academic research has suggested that prediction markets can be highly accurate, and proponents describe them as "truth discovery tools." One prediction-market metric for investors to pay attention to, however, is the volume of trading on a given contract. If prediction markets distill the wisdom of the crowd, a larger crowd makes for more accurate predictions. Thinly traded markets have fewer inputs to determine the percentage odds, and those odds are more susceptible to outsize swings.
To be sure, prediction markets don't get it right every time. "There's always some nonzero chance that something doesn't go your way," Meininger says, even if the odds are near 100%.
This past week, Polymarket traders predicted that WD-40 Company had an 88% chance of beating Wall Street's estimate for quarterly earnings per share of $1.45. The firm reported $1.28, and its shares dropped 6.6% on the news.
And some prediction markets -- especially mention markets -- can be easily influenced.
At the conclusion of a Coinbase earnings call in October, CEO Brian Armstrong told investors that he'd been tracking the prediction market for what he'd say, though he later clarified he wasn't trading the mention market himself. "I just want to add here the words 'Bitcoin,' 'Ethereum,' 'blockchain, 'staking,' and 'web3' to make sure we get those in before the end of the call."
On Polymarket, several traders cashed in on Armstrong's concluding statement, including one who pocketed a market-best $85.
Write to Nick Devor at nicholas.devor@barrons.com
This 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.
(END) Dow Jones Newswires
January 12, 2026 03:00 ET (08:00 GMT)
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