Institution: Polymarket’s corporate earnings forecasts may be more accurate than those of Wall Street analysts

Gelonghui April 20｜According to a report by Wolfe Research, Polymarket users predicting that a company's earnings performance may fall short of expectations have a probability of being correct at 44%, more than double the historical benchmark level of 18%. When Polymarket bettors are highly optimistic that a company's earnings will exceed expectations, the probability of this happening reaches a staggering 90%, higher than the usual 81% level. Yin Luo, head of Quantitative Research at Wolfe, stated that this accuracy might be due to the effect of crowdsourcing. In such cases, investors betting on a company’s earnings results on Polymarket may provide more diversified perspectives compared to market consensus expectations based solely on sell-side analysts.

Additionally, a draft paper updated earlier this month by researchers from London Business School and Yale University concluded that these emerging platforms exhibit high accuracy, can incorporate new information faster than analysts, and avoid some inherent biases in Wall Street forecasts. The research also found that people wagering in earnings markets tend to be unusually sophisticated. Insider trading may also be a contributing factor.