“prediction market odds need recalibration before they can sharpen equity valuations”
Proposes a workflow for using prediction market probabilities as inputs to equity valuation models. Walks through two case studies: translating Polymarket's 51% tariff refund probability into a 35% effective probability for Logitech's margin impact, and converting a 29.5% FDA approval probability into a $5.4B probability-weighted EV uplift for Eli Lilly. The key insight is that raw market probabilities must be adjusted for contract wording mismatches and economic relevance before they become useful for stock analysis.
Some technical background helpful
Platforms mentioned: Polymarket