It's no secret the fantasy sports market has exploded over the past couple years, hitting a new mark of 57 million participants in the U.S. and Canada, according to the Fantasy Sports Trade Association. Now, one financial firm is trying to capitalize on the growing fantasy sports market with a new program geared toward Wall Street.
Estimize, a company that uses crowdsourcing to forecast earnings estimates, is launching a new platform that features leagues similar to fantasy sports. Only this time, you're not drafting professional athletes—you're forecasting your own estimates for quarterly financial results.
Users have the choice of creating a league of their own with friends, or they can join one of the leagues already created by Estimize. The league owner then chooses a set amount of companies for which users can make financial estimates. The more accurate you are to the actual financial reports, the more points you accrue.
"No matter who you are, a buy-side hedge fund analyst, independent trader or student, people love to compete against one another, especially to prove their dominance on a specific topic," said Leigh Drogen, CEO of Estimize.
"The aspect of being in a race to acquire the most points against your peers and friends isn't just fun, it's in the DNA of everyone who participates in financial markets," he added.
A league of their own
Estimize has compiled leagues of its own allowing users to submit estimates for a variety of different stocks ranging from the media sector to travel, and even on recent initial public offering names. If you win those leagues, you can get prizes such as Super Bowl tickets, or Airbnb credits.
Although official scoring doesn't start until next month, it's already catching on around Wall Street with firms like Oppenheimer and Needham & Co. creating their own leagues.
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Nick Raich, CEO of The Earnings Scout, said he thinks it's a great idea because he has long compared stock investing to fantasy football.
"You pay a high price, or high PE, for a great player based on how he performed last year, just like a company's financials from the previous year. Then more importantly you look at how he is projected to perform this year, just like looking at a company's financial estimates," he said.
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Too 'short-term'?
However, some of those around Wall Street have their doubts that this idea is a positive for the financial markets. Peter Andersen of Congress Wealth Management thinks it puts too much emphasis on short-term earnings, a frequent criticism of those who fault the short-term thinking of financial markets.
"I'm actually trying to get away from short-term earnings. I think there has been so much focus on the short term, and this will just exacerbate that," Anderson said. "It could be fun for young people to learn about the stock market but this is just too short term," he added.
"Does it signal a market bubble?" Anderson asked. "If the general masses are going to pursue something like this, it is worrisome because it's leading people to focus on the wrong things in valuating stocks," he said.
So while not all across Wall Street agree, it could certainly make for a more interesting third-quarter earnings season for those involved when things kick off early next month.