Morgan Stanley upgraded Robinhood Markets Inc. (NASDAQ:HOOD) to Overweight from Equal-weight on Tuesday and raised its price target to $150 from $124, implying roughly 43% upside from Monday’s close.
Analyst Michael Cyprys said Robinhood is getting more revenue out of customers it already has, highlighting prediction markets as a key example.
Robinhood generated $156 million of prediction market revenue in the second quarter from a product fewer than 2 million customers had used, according to the note.
That beat the $129 million the company made from stock trading and the $100 million from crypto.
Morgan Stanley made the call while cutting its crypto forecasts, yet still raised its 2026 through 2028 earnings estimates by 12% to 15%.
Prediction Markets Are Now a Real Business at Robinhood
Robinhood users traded 13.6 billion event contracts in Q2, more than 10 times the year-earlier figure, and revenue from the product grew at a similar pace.
July added another 6.1 billion contracts, around 20 times the July 2025 level. CFO Shiv Verma told analysts on the earnings call that close to 2 million customers have now used the product.
Verma also said prediction market customers are more likely to hold a Robinhood retirement account. That supports Cyprys’ argument that new products lift assets and activity per customer rather than simply adding another fee line.
Morgan Stanley now expects revenue to grow 23% a year to $8 billion by 2028, about 6% above consensus.
Robinhood Wants to Keep More of Each Trade
Robinhood historically listed contracts from third-party exchanges, first ForecastEx and then Kalshi.
Rothera, an independently managed exchange venture between Robinhood and Susquehanna, launched in June and lets Robinhood route prediction-market trades through an affiliated exchange rather than relying entirely on third parties.
Rothera had processed more than 3.5 billion contracts by the time Robinhood reported Q2. CEO Vlad Tenev called the economics “great,” and Verma said an increasing share of prediction market flow, potentially a majority, should move through Rothera in the near to medium term.
The Nevada Problem Has Not Gone Away
The Ninth Circuit ruled Friday that the sports event contracts at issue are not swaps under the Commodity Exchange Act, clearing the way for Nevada to apply its gaming laws to Robinhood, Kalshi and Crypto.com. Robinhood said it plans to appeal, but the ruling keeps a regulatory cloud over the company’s fastest-growing product.
Cyprys flagged Rothera and the Sept. 29-30 HOOD Summit as the next catalysts. The upgrade suggests Wall Street is increasingly willing to treat prediction markets as part of Robinhood’s core earnings engine, even as expectations for its crypto business weaken.
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