Morgan Stanley Boosts Robinhood; Stock Jumps Amid Debate

Morgan Stanley upgraded Robinhood Markets to Overweight and raised its price target to $150 from $124, triggering a 16.6% gain on Thursday. The shares closed Friday at $122.11, down 2.1% on the day.

Piper Sandler increased its target to $145, and Scotiabank began coverage with an Outperform rating and a $136 target. After Thursday’s surge the stock traded near prevailing analyst consensus levels.

Morgan Stanley cited a shift in Robinhood’s business mix away from reliance on episodic trading and wrote there is “increasing evidence” that the firm’s expanding product set is improving customer economics. The bank said 13 of Robinhood’s businesses now generate more than $100 million in annualized revenue and projected revenue to compound about 23% through 2028 to roughly $8 billion. Morgan Stanley also raised its 2026–2028 earnings estimates by 12% to 15%.

Data providers and some analysts noted the market may not be fully valuing recurring revenue sources such as subscription fees, interest income, clearing economics and emerging international crypto infrastructure.

Prediction-market contracts have been a fast-growing revenue line. Robinhood reported $156 million of event-contract revenue in the second quarter, while total quarterly revenue rose 32% year over year to $1.31 billion. Piper Sandler projects prediction-market revenue could reach about $320 million across the third and fourth quarters, supported by NFL and college football activity.

Regulatory risk remains unresolved. On August 28 the U.S. Court of Appeals for the Ninth Circuit affirmed a ruling that denied Robinhood preliminary relief against Nevada regulators and rejected the argument that sports-event contracts fall outside state gaming oversight. The decision referenced related cases involving other trading platforms. The ruling does not stop Robinhood’s prediction-market operations but highlights potential legal and regulatory volatility for that business.

Robinhood’s July operating data showed mixed trends. Funded customers reached 28.5 million, while total platform assets fell 4% from June. Month-over-month activity slowed: equity trading volume declined 15%, crypto volume fell 33%, and event-contract volume slipped 5%, although event-contract activity remained about 20 times higher than a year earlier.

Analyst views remain split. Rothschild and Co Redburn maintained a Sell rating in August with an $80 target, creating a wide gap with Morgan Stanley’s $150 forecast.