Morgan Stanley Upgrades Robinhood Markets (HOOD) Amid Diversification and Growth in Prediction Markets
On September 1, Morgan Stanley upgraded Robinhood Markets Inc. (NASDAQ: HOOD) to Overweight from Equal Weight, raising its price target to $150 from $124. The upgrade is based on the belief that Robinhood's expanding product ecosystem—spanning subscriptions, banking, credit, and prediction markets—is improving customer engagement and monetization opportunities. A key growth driver for Robinhood has been its prediction market segment, which saw event-contract volume surge to 13.6 billion contracts in Q2—a tenfold increase from the prior year—and revenue jump from $10 million to $156 million. The company also launched Rothera, a CFTC-licensed exchange that supports this business and could generate additional third-party revenue. Despite diversification efforts, Robinhood remains heavily reliant on trading activity for revenue—$776 million in Q2 compared with $389 million from net interest—and is thus exposed to risks like declining retail trading or falling interest rates. The company also faces intense competition from firms such as Charles Schwab and Coinbase.
Topics: Morgan Stanley Prediction Markets Revenue Growth Robinhood Markets