Robinhood Markets shares rose in premarket trading on Tuesday after Morgan Stanley upgraded the online trading platform to Overweight from Equal-weight and lifted its price target to $150 from $124. The move came as broader cryptocurrency-related stocks edged lower in early trading, underscoring that investors were focused on Robinhood’s standalone growth levers rather than the crypto complex.
Morgan Stanley pointed to improving customer engagement, an expanding product suite, and rising revenue contributions tied to assets already on the platform. The firm also raised its earnings estimates through 2028, suggesting a more constructive longer-term earnings profile for the business.
Key takeaways
- Price move: Robinhood shares gained about 1.4% in premarket trading.
- Catalyst: Morgan Stanley upgraded the stock to Overweight and increased its price target to $150.
- What drove it: Expanding product offerings and improving unit economics from existing customers, alongside momentum in prediction markets and asset-based revenue.
- Key implication: The upgrade signals rising confidence that Robinhood can grow revenue without relying solely on growth in funded accounts.
- Positioning: The stock remained down roughly 7% year-to-date at the time of the upgrade, suggesting the rating change could alter investor expectations.
What drove the move
According to Morgan Stanley, Robinhood’s broader platform capabilities are increasingly improving the economics of its installed customer base. Analysts led by Michael Cyprys said there is “increasing evidence” that expanded product offerings are helping boost the profitability of existing users.
The bank raised its earnings-per-share estimates for the next three years by 12%, 14% and 15%, respectively. A central theme in the note was monetization: Morgan Stanley emphasized Robinhood’s ability to generate more revenue from its existing customer base rather than depending primarily on growth in funded accounts.
The firm also highlighted that Robinhood now has 13 business lines generating more than $100 million in annualized revenue, a metric it used to support the view that multiple streams of income can broaden the company’s growth profile.
Market reaction and expectations
Robinhood stock was up about 1.4% in premarket, though it was still down about 7% since the start of the year, according to the article. Morgan Stanley’s $150 target implied roughly 43% upside versus Monday’s closing price, while FactSet data cited in the report showed an average analyst target of nearly $126.
By lifting the target and upgrading the rating, Morgan Stanley is effectively signaling that it expects both better revenue durability and improved margins as the platform adds products and increases engagement. Investors appeared to focus on these operating drivers rather than the direction of crypto-adjacent equities, which were described as declining in premarket trading.
Prediction markets and product expansion
A key part of the investment case in the Morgan Stanley analysis was the growth potential of prediction markets. The report said 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.
While the headline revenue figure points to a meaningful contribution from prediction markets, Morgan Stanley also noted that fewer than 2 million prediction-market users drove that $156 million in second-quarter revenue. The bank used this discrepancy to underline what it sees as further upside tied to expanding active participation.
Beyond prediction markets, Morgan Stanley pointed to Robinhood’s continuing product expansion, including retirement accounts, credit cards, advisory services, banking features, gold offerings, and trust-related products. The analysts argued these additions can encourage customers to hold more assets on the platform, which in turn supports asset-based revenue.
Trading activity was another engagement lever cited by the firm. It noted that Robinhood has introduced features including short selling, futures, and desktop trading—changes Morgan Stanley said have helped active traders use the platform more frequently. The report also referenced a 23% year-over-year increase in assets per customer and said gold users held about 4.2 times the average customer’s assets under custody.
Bigger picture: monetizing infrastructure and improving margins
Morgan Stanley also framed Robinhood’s growth in terms of infrastructure and value-chain control. The firm said Robinhood has begun routing prediction-market event contracts through its affiliate exchange, Rothera, giving the company more control over the related economics.
The bank acknowledged revisions “despite lower crypto forecasts,” suggesting its updated view is less dependent on crypto pricing assumptions and more supported by expected strength in active trading, prediction markets, and asset-based revenues.
In addition to the target, Morgan Stanley projected revenue growth at a 23% compound annual growth rate through 2028, reaching $8 billion—about 6% above consensus estimates, according to the report. The firm also expected expense discipline to lift EBITDA margins to 53% from 48%.
Potential catalysts mentioned by Morgan Stanley included the HOOD Summit scheduled for Sept. 29–30, further developments at Rothera, perpetual futures, and “agentic trading.” The note also stated that the $150 target was based on a 25-times multiple of the company’s 2031 probability-weighted earnings.
What to watch next
With Morgan Stanley’s upgrade and higher target changing the stock’s near-term narrative, investors will likely watch for confirmation of engagement trends in prediction markets and continued progress on monetization across existing products. Next, attention is expected to turn to scheduled company events such as the HOOD Summit in late September, along with ongoing updates that could inform the market on revenue growth and margin trajectory into 2028.
