This is a sign that prediction markets are very close to mainstream adoption, but they will first distance themselves from their gaming bedfellows so that the audit committees of company boards don’t become apoplectic.
I think the potential for information markets is much larger than usually reported. I also think the reluctance to try them is deeper than most want to admit and thus it will take longer to catch on.
This is high-level thinking with so many variables and unknowns that one’s experience and intuition must fill the gaps to reach a desired outcome.
Now we see what happens when the environment turns hostile; when blockbusters get some competition; and when growth doesn’t materialize: a slow, agonizing surrender of market value. Indeed, they’ve been grinding their stockholders to death for the past 5 or 6 years.
FDA action can and will eventually get the market’s attention, not only damaging the erstwhile credibility of the firm but its enterprise value as well.
“How big can we get before we get bad?” - Jay Chiat
Trust matters because when it unexpectedly departs, so too goes much of the value it created and sustained.
This power stems from the very nature of markets as information machines: they both consume and produce information, the latter being an invaluable asset to management as it makes decisions about an uncertain future.