A Financial “Super App” & Met Gala Moments 5/5/26

22:04Yeah. I mean, first of all, we're building a financial super app, serving our customers across any asset class, any financial transaction anywhere in the world. So Prediction Markets is a new space. It really entered the mainstream with the 2024 election. And the thing that I love about it is it's not only a tool to help traders specialize. Now you can specialize in all sorts of things, but it's a great source of information. It's like a compliment to the news.

22:39Andrew Ross Sorkin:I think the information piece of it is great, assuming that you believe the information is not being manipulated in some way. Yeah, and that's true. And that's why we're focused. And a lot of talk is about, you know, all these issues that prediction market platforms face. face. And what we've always been saying is, you know, we're coming into this as a regulated financial services company complying with U.S. laws. And a lot of things get funky when you amalgamate all the all the offshore platform. Here's the thing that I do. Two pieces to this. One, I don't know if you saw there was a study done just in the past.

23:12Andrew Ross Sorkin:It came out in the last 48 hours, at least for Polymark and I think for Calci, where they were suggesting that, you know, it was like the tiniest, tiniest group of people are the ones that are winning, They make up the bulk of the trades. They make the bulk of the trades and that most people who are participating are effectively net losers. I mean, I haven't dug into the data in detail. We offer a suite of products. For most of our products, they're self-directed, which means we're not telling people what to trade. We're not making recommendations. Right. We do have some products that we take on a fiduciary responsibility.

23:50we trade on behalf of our customers. For example, Robinhood Strategies, which is our digital advisor. We also have human advisors through TradePMR. But I think you can slice and dice this data in many different ways. And the thing that makes it difficult with these types of derivatives markets is sometimes it's hard to look at them in isolation. You don't know if that person is hedging, if they're speculating, if they have other positions elsewhere. which I think you can always find a way to slice it so that it looks negative. But we're just focused on providing the best access for our customers to this new asset class.

24:30I understand that you can slice data so that it looks negative, but there have been a number of studies and academic ones, so not funded by the industry, presumably, that show that retail investors may guess successfully the outcome of the, whatever event you're talking about, 51 % of the time, I think, is a stat, by one university study, but they get in late and it's the bots, the algorithms that trade on the contract earlier. They make up much more of the volume. And so because they're going earlier and retail investors are getting in at the very last minute, that they're making much more money.

25:04There are a number of studies that show that retail investors are at a disadvantage because the activity of algorithmic bots in this market. Is that a concern of yours? I mean, the bread and butter of your platform is helping individual investors, right? And are you setting them up in a situation where the odds are stacked against them to actually make money because of the way, because maybe it's a lack of bar miles? Yeah. Yeah. I mean, I think that the algorithmic bots are a relatively new thing with a lot of these AI tools that are coming on. You actually are starting to see some retail investors writing these themselves, you know, the last Claude or Codex to generate a strategy for them.

25:52And we're thinking about, okay, right now you have to be like a quant or an engineer to do this, but can we make it so that everyone can have access to this powerful technology?

26:04Andrew Ross Sorkin:Let me ask you a different one, sports, because there's a bit, You know, sports is now part of the prediction market space that you're playing in. And I don't know if you saw, there was a fascinating interview with Gary Gensler recently who made the argument. That's a name I haven't heard in a very long time. Right. And the argument he made, he said, when he was running the CFTC, when the laws were actually changed that allowed for all of this, he said, no senator, no congressperson ever discussed the idea that this was going to be used in the context of sports. And that had it had it been uttered, even allowed once, this would have never been allowed to happen because all of these states rights and states rules that had already been put in place.

26:46Andrew Ross Sorkin:Every senator who was from one of those states would have been like, we're not doing this. This is crazy. And so he said, if you actually go look at the intent of what the law is at the time, you couldn't get to this place today. Yeah, I think there's reasonable arguments on both sides of this issue. I'd say the other side of that is that sports is a much bigger chunk of the economy than it was 20 years ago. Right. And you have NBA franchises and. Oh, totally. MLB franchise. I don't disagree. And maybe the law should be updated. I'm just suggesting that the law that's being used to allow for prediction markets to play in the sports space currently, or at least the argument.

27:26Andrew Ross Sorkin:and right, there's lawsuits over this, is using a law that he's suggesting was never intended for that. I mean, here's the thing. Sports, I think, is going to be an increasing chunk of the business and finance world. They're starting to increasingly converge, for better or worse. I'm not saying necessarily it's a good thing, but if you think about AI automation and the risks, sports actually is probably like one of the few human things where we have high confidence. It's not going to be automated away. So you don't want to watch self-driving cars racing around the track. So I don't know if you saw over the weekend, Warren Buffett spoke very briefly at the annual meeting with Becky Quick and made an argument that he talked about the church, meaning the market, and then the casino.

28:20Andrew Ross Sorkin:And he said a lot more people are playing in the casino than they used to. I've compared the markets to a church with a casino attached. And people can move between the church and casino. And I would say there are more people in the church and more people in the casino. But the casino's gotten very attractive to people. If you're buying one-day options or selling them, I mean, that is... That's not investing. It's not speculating. It's gambling. Like, you know, just totally. I'm curious, as someone who's in your business and space, introducing new products, including prediction markets and the like, whether you see that part of it as the casino.

29:08No. I think that we have a trading side of the business where customers are actively trading, and some of them actually are quite systematic and sophisticated about it. And of course, you have some customers who are just, you know, trading because they like a certain team. Right. Right. But as with any market, you have lots of participants. But we have people that have strategies, like you mentioned earlier. Sometimes they're even systematic and automated. And I think this criticism, you know, the same criticism was given about futures markets 40 or 50 years ago. And, you know, you hear it about options markets and even equities markets.

29:57So no stranger to it. I think the other thing is, you know, I announced a few days ago, Robinhood retirement is at$31 billion in assets under custody after just a few years. And I think that the unfortunate reality is it's much more enticing to talk about prediction markets than the growth of our passive offerings. Nobody wants to hear or really talk about how fast retirement is growing. I want to talk about how many people are, you know, I want to talk about retirement. And I also want to talk about the Trump accounts in just a moment.

30:31Andrew Ross Sorkin:But I have one one more question just on the I wouldn't put it in the prediction markets category, but in the maybe trading category. We had this interview yesterday. I don't know if you saw any of it seem to go a little viral with Ryan Cohen from GameStop. GameStop played a huge role in the history of your company. Oh, yeah. For better or worse. And I was struck by the reaction to the interview in a way because it was like a Rorschach test for certain people. There were a lot of what I would describe as, I don't know if they're legacy investors, experienced investors, I don't know what, who would say, oh, my God, that made no sense.

31:12Andrew Ross Sorkin:The math doesn't math. This doesn't really work. We don't understand how someone like a Ryan Cohen is making a takeover bid at a company that's worth$11 billion. How is he buying a company that's worth$56 billion? But there's still a huge number of people online who I imagine are trading on places like Robinhood who are like, you don't understand. This is the man. He's figuring it out. He's doing it. It was like a flashback to the meme stock. And it was sort of wild to watch that. I look at the math and go, you have$11 billion. The company you're trying to buy is$56 billion. I don't know how you get there.

31:53Andrew Ross Sorkin:But other people seem to think something very different. Well, look, Ryan Cohen's an incredible entrepreneur, right? I mean, what he did with Chewy is just an incredible business. So I wouldn't underestimate him. And, you know, he explained half cash, half stock. Right. Do you understand that? Did you read the website? I did read the website. I did read the website. What do you think? I mean, I don't know the details about it You know math, though Do you know how to get from$11 billion to$56 billion? Well, my understanding is They've got some cash on the balance sheet $9 billion of cash So$9 billion out of$11 billion So if you were going to do the math You would actually subtract, frankly, the$9 billion out And then you'd be left with a company that has$2 billion to stock And then there's$20 billion $20 billion, yeah From TD Yeah So that's$29, right?

32:46$29, yeah And the market cap of eBay is? The offer is$56 billion. So that's more than half by a little bit.

32:56Andrew Ross Sorkin:Right. But then what would you do to get to the rest? I mean, yeah, again, I think it's unclear how that part is going to be. And why would an eBay shareholder accept that? Right. I mean, that's, as I'm just saying, is that you look at it, you go, this doesn't. But going back here, I mean, I think that at the heart of that question is how much of that sort of spirit still lives on your platform in the form of trades? I mean, we've seen meme stock mania sort of, we see evidence of it here and there. We see, for instance, the recent action in Avis was crazy. I mean, that company, you know, just recently was like a meme stock, the way it shot higher.

33:39And that was also an engineered squeeze, basically. And so do you still see that? Is that powering you or are you completely moved away from that? I mean, retail has continued to be active, even though market conditions in the past three months have been shaky. You know, you've had the macro environment, the crypto winter, the war. But retail has been surprisingly strong. I'd say most of it has been concentrated in the AI trade. Right. Right. You're seeing, you know, traditional disruptors, the big semiconductor companies, a lot of interest in memory. But, you know, you do have pockets.

34:20Andrew Ross Sorkin:We're going to run out of time. Trump accounts. It's going to cost you a hundred million dollars. What kind of advantage are you going to have over every other player by doing this? Yeah. So first about the hundred million dollars, I think there was some confusion around this point. We, uh, the, this program will be profitable in the first year. So serving as a government subcontractor, this is under a cost plus model. And we actually think it'll go beyond, uh, it could go beyond, uh, we see, we see us being able to help various governments with, with various things. So we're excited about that.

35:00And the reason the number might seem large is we're gearing up to support potentially a very large number of accounts. I mean, there's 60-plus million children under the age of 18. 5.5 million have signed up already. So we have to get ready to serve tens of millions. No question.

35:22Andrew Ross Sorkin:And then hopefully they're going to all be onboarded onto Robino and stick around. I mean, that's the whole goal. I think we see a big opportunity to serve these customers. I mean, of course, at first, there's going to be a Trump accounts app that we've been designing in collaboration, of course, with BNY and the National Design Studio. And this app is going to be really good. The aspiration is to make this the best product that the government has ever been. That was my question, though. So how do you attract those people onto the Robinhood platform if it's going to be living on another app? I mean, we're very long term focused with this.

35:59Of course, right now, the focus is on making the Trump accounts app as successful as possible. But there's going to be rollovers. There's going to be opportunity. Once these children turn 18, the money can move to other types of accounts. and we're serving as the initial brokerage and trustee for the accounts, which we're very proud of that position. But again, I'm not spending much time thinking about how to market it beyond just getting the word out about how great of a program this is and how much it'll help the next generation really buy into this country and the system that we have.

36:41Andrew Ross Sorkin:Here is a prediction market run that you get tests that you could put in on the on your prediction market. Do you believe in five years from now they will be called Trump accounts or do you think will be called invest in America? accounts. Yeah, that's a good question. Yeah, that's not one I've spent much time thinking about, but there is some precedent. If you look at the Roth IRA named after Senator Roth, it continued to be called the Roth IRA. By the way, they may ultimately be the Trump accounts. I just don't know because there's all sorts of conversations about whether the Trump-Kennedy center will be the candidate.

37:22Andrew Ross Sorkin:You know, who knows what's going to happen in the future. Right. Yeah. Yeah. I mean, we're just proud to be providing the service. We try to stay out of those types of discussions and stay in our lane of just building the best product that the government has ever been associated with. We're up against a heartbreak. I want to thank you for coming in. So much to talk about. And we could continue this for like an hour and hopefully we get to do it again. Always a pleasure. Thank you. You bet. Still to come on SquawkPod, e-host Kelty Knight, recapping a night at the Metropolitan Museum of Art, the big fashion and big money moments.

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39:42This is Squawk Pod.

39:44Andrew Ross Sorkin:Up and Andrew, cue. Watching Squawk Box right here on CNBC. I'm Andrew Osorkin along with Melissa Lee. Joe and Becky are off today. The Met Gala is New York City's biggest fashion event. It did not disappoint. The invitation-only fundraising benefit had some very big stars and even bigger red carpet looks. Eze Kelty Knight covered the event last night and joins us now with more on the whole the whole situation. Tell us about the whole situation. It was all over my my social media feed. It's become a business unto itself in so many ways. And then, of course, there's all of the business behind it.

40:23100 percent. Listen, it was a fantastic night at the Met. And I think there has been a lot of talk about the Met Gala this year, the chairs, the committee, And we have to remember that the money goes directly to support the Met. The Metropolitan Museum of Art is completely supported by this gala, the Fashion Institute. And so it's very important for them. And it was very important for me when Beyonce showed up looking like an absolute queen. Beyonce made her triumphant return to the Met after 10 years. And this time she made it with her daughter, Blue Ivy, in tow. And Blue is the coolest kid you've ever seen.

41:02We asked her as she came along the red carpet, you know, how are you feeling? She said, I'm having fun. Jay-Z was also on hand to support his wife. It was, it's Beyonce's world. Listen, she came. This is an amazing piece of art that was designed for her. She did change when she was inside to give her speech. But Beyonce was in a great mood last night and she was actually on time, which is sort of shocking. I have spent many Met Galas waiting for Beyonce and Rihanna in the rain. And so I was thrilled to see Beyonce show up and show out in such a big way. Another standout look. Sorry.

41:33Andrew Ross Sorkin:No, sorry. I have a question for you. And I know it's not a look, but it's the thing that I was thinking about all as I was watching this whole feed. I just saw Devil Wears Prada 2. Oh! Which, great film. And of course, as you know, the Emily Blunt character with Justin Theroux, I think are modeled, dare I say, on Jeff Bezos and and Lauren. And therefore and then they they were there. Right. And so I was curious how that all went down inside. Listen, I think that Anna clearly is in on all of it. You know, Meryl Streep and Anna Wintour posed on the cover of Vogue just this month to celebrate the mat.

42:17And so there's really no way that Anna didn't know what the movie is about, that the script, it was sort of on the nose. The Devil Wears Proud of Two really is about this like billionaire guy coming in and sort of buying the magazine to put his wife on the cover. and so many people thought, oh, this is like a Bezos moment. But again, at the end of the day, I'm very happy that we have the Costume Institute. It is very expensive to have these artifacts and pieces as a part of your museum. And I personally love that I can go there and for$19, I can go see this entire exhibit all year long. These artisans are working on these pieces.

42:52This is a part of history and it does cost money to run these things and the money has to come from somewhere. And so So listen, if Jeff Bezos and Lauren Sanchez want to support the Met, this is where they want to put their philanthropy money. I'm OK with it because the Met is something special and it's special for New York. It's special for the world. It's special for all of the designers. We had on our show last night an entire audience of students from the Fashion Institute of Technology watching our show. It's a really big deal in the fashion and creative space. And so anything to keep arts alive is, I think, really important.

43:25Andrew Ross Sorkin:First time visitor in our world since we're on CNBC. Mark Zuckerberg was there last year. And the Instagram team has been going there for years, I think. Yeah, for sure. Meta had a table last night, and I'm sure that Instagram is going wild with this Kardashian look that you're looking at right now. She had seven fittings, flew across Europe to be fit for this look over and over again. We had Chris Appleton, her hairstylist, on our e-show. he discussed that he was bleaching her hair the perfect blonde until 2 a.m in the morning to get the tone right i mean this is a very thought out thing and when you met you met like kim kardashian does not come to the met to not be the most popular person on instagram what do you think the call i was thinking about this what do you think the cost is for the designers and the night and the celebrities per person meaning if you're gonna if if somebody like uh kim kardashian is going to show up in that costume in that costume plate and all of the the makeup artists and hair folks and I mean the whole the apparatus per person is kind of an extraordinary thing yeah for sure I mean this is a really a collaboration if you look at someone like Janelle Monae last night that came in this very AI art taking over uh you know art taking over you know here it is earth taking over ai and this whole like this is a custom piece by christian siriano this is priceless this is a priceless work of art this is hundreds and hundreds of hours from his atelier i mean there is no price you can put on this but the designers actually do these pieces for free for these artists because they get back mega mega millions of dollars in you know knowledge of their brand but i'm talking like these are the best glam teams in the world I wouldn't be in doubt if her glam team preparation alone was in the$40 ,000,$50 ,000 range just for her glam.

45:19Andrew Ross Sorkin:Kelty, doing math for us this morning as we're all trying to make sense of all of it. Appreciate it very, very much. Listen, it was amazing. My glam this morning was free because I slept in my glam from last night's show. So thank you so much. Thanks for waking up early for us. Thanks. And that is Squawk Pod for today. Thanks for listening. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Thanks to Melissa Lee for sitting in today. You can tune in weekday mornings on CNBC at 6 Eastern. Or get the smartest takes and analysis from our TV show right into your ears when you follow Squawk Pod, wherever you get your podcasts.

45:58And listen anytime you want. Have a great day. We'll meet you right back here tomorrow. We are clear. Thanks, guys.

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