Robinhood Markets (HOOD) shares edged higher in premarket trading Tuesday after Morgan Stanley raised its rating on the online brokerage to Overweight from Equal-weight and lifted its price target to $150 from $124. The new target implies roughly 43% upside from Monday's close, according to FactSet data, which also shows the average analyst target sits near $126.
The upgrade comes even as broader crypto-related equities slipped, with Coinbase and Strategy trading lower in premarket action. Robinhood's stock has declined about 7% since the start of the year, but the bank's analysts, led by Michael Cyprys, see multiple growth drivers ahead.
Product expansion and customer engagement
Morgan Stanley highlighted Robinhood's expanding product lineup, including retirement accounts, credit cards, advisory services, banking, gold, and trust offerings. These additions are improving the economics of the existing customer base, the analysts wrote, noting that the company now has 13 business lines generating more than $100 million in annualized revenue.
Assets per customer have climbed 23% year over year, and Gold subscribers hold roughly 4.2 times the average customer's assets under custody. The bank raised its earnings-per-share estimates for 2026 through 2028 by 12%, 14%, and 15%, respectively, even while lowering its crypto forecasts.
Prediction markets and active trading
Prediction markets emerged as a major growth area. Event contract revenue surged to $156 million in the second quarter from just $10 million a year earlier, surpassing revenue from equities and crypto trading. Morgan Stanley noted that fewer than 2 million prediction-market users generated that revenue, underscoring the potential for further engagement.
Robinhood has also introduced features like short selling, futures, and desktop trading, which have encouraged active traders to use the platform more frequently. The bank expects revenue to grow at a 23% compound annual rate through 2028, reaching $8 billion—about 6% above consensus—and sees EBITDA margins expanding to 53% from 48%.
Infrastructure and future catalysts
Morgan Stanley also sees monetization opportunities as Robinhood expands into market infrastructure. The company has begun routing prediction-market event contracts through its affiliate exchange, Rothera, giving it more control over the value chain. The analysts noted that their revisions come despite lower crypto forecasts, with upside increasingly driven by active trading, prediction markets, and asset-based revenues.
Potential catalysts include the upcoming HOOD Summit on Sept. 29-30, the continued rollout of Rothera, perpetual futures, and agentic trading. The $150 target is based on a 25-times multiple of 2031 probability-weighted earnings.
With Morgan Stanley's new target implying significant upside, Robinhood remains a focal point for investors evaluating online trading platforms. For broader context on market dynamics, see our coverage of AI-led market risks and Robinhood's recent surge.
This article is for informational purposes only and does not constitute financial advice.
