Robinhood stock rises as Morgan Stanley upgrades HOOD to overweight

Robinhood Markets HOOD shares rose in premarket trading on Tuesday after Morgan Stanley upgraded the online trading platform to Overweight from Equal-weight and raised its price target to $150 from $124.

The upgrade came even as broader cryptocurrency-related stocks declined, with Coinbase and Strategy trading lower in premarket activity.

Morgan Stanley said Robinhood’s expanding product lineup, stronger customer engagement and growing asset-based revenues could support further growth.

The bank also raised its earnings estimates for the company through 2028.

Morgan Stanley raises Robinhood price target

Robinhood shares gained about 1.4% in premarket trading, while the stock remained down about 7% since the start of the year.

Morgan Stanley’s new $150 price target represents roughly 43% upside from Monday’s closing price. FactSet data showed an average analyst target of nearly $126.

Analysts led by Michael Cyprys said Robinhood’s broader product capabilities are improving the economics of its existing customer base.

“We see increasing evidence that broader product capabilities are improving the economics of HOOD’s installed customer base,” Cyprys wrote.

The bank raised its earnings-per-share estimates for the next three years by 12%, 14% and 15%, respectively.

Morgan Stanley highlighted Robinhood’s ability to generate more revenue from its existing customer base rather than relying primarily on growth in funded accounts.

The company now has 13 business lines generating more than $100 million in annualized revenue, according to the bank.

Prediction markets boost engagement

Prediction markets were identified as a major growth opportunity for Robinhood.

Event contract revenue increased to $156 million in the second quarter from $10 million a year earlier, surpassing revenue generated from equities and cryptocurrency trading.

Morgan Stanley said fewer than 2 million prediction-market users generated the $156 million in second-quarter revenue, highlighting the potential for further customer engagement.

The bank also pointed to Robinhood’s expanding range of products, including retirement accounts, credit cards, advisory services, banking, gold and trust offerings. These products could encourage customers to hold more assets on the platform.

Higher trading activity is another factor supporting the upgrade. Robinhood has introduced features including short selling, futures and desktop trading, which Morgan Stanley said have helped active traders use the platform more frequently.

The analysts noted that the company’s assets per customer had increased 23% year over year, while Gold users held about 4.2 times the average customer’s assets under custody.

Infrastructure offers another growth avenue

Morgan Stanley also sees greater monetization opportunities as Robinhood expands further into market infrastructure.

The company has begun routing prediction-market event contracts through its affiliate exchange, Rothera, giving it more control over the related value chain.

“Notably, our revisions come despite lower crypto forecasts,” the analysts wrote, adding that the upside is increasingly driven by active trading, prediction markets and asset-based revenues.

Morgan Stanley expects Robinhood's revenue to grow at a 23% compound annual growth rate through 2028, reaching $8 billion, about 6% above consensus estimates.

The bank also expects expense discipline to increase EBITDA margins to 53% from 48%.

Potential catalysts include the Sept. 29-30 HOOD Summit, Rothera, perpetual futures, and agentic trading.

The bank’s $150 target is based on a 25-times multiple of its 2031 probability-weighted earnings.

With Morgan Stanley's new target implying 43% upside, HOOD is likely to stay on the radar of investors evaluating online trading platforms.