Morgan Stanley Upgrades Robinhood, Lifts Price Target to $150

Robinhood shares rose about 1.4% in premarket trading after Morgan Stanley upgraded the stock to Overweight from Equal-weight and raised its price target to $150 from $124. The new target implies roughly 43% upside from Monday’s close. The stock remains down about 7% year to date.

Analysts at Morgan Stanley, led by Michael Cyprys, cited an expanding product lineup, stronger customer engagement and growing asset-based revenues as reasons for the rating change and higher target. The firm raised its earnings-per-share estimates for the next three years by 12%, 14% and 15%, respectively. FactSet shows the average analyst price target near $126.

Morgan Stanley said Robinhood now has 13 business lines each generating more than $100 million in annualized revenue. The bank highlighted prediction markets as a major growth area, noting event contract revenue rose to $156 million in the second quarter from $10 million a year earlier. Fewer than 2 million prediction-market users produced that $156 million, the bank wrote, indicating scope for further monetization if adoption expands.

The firm pointed to new products that could increase assets on the platform, including retirement accounts, credit cards, advisory services, banking products, a gold custody product and trust services. Morgan Stanley reported assets per customer rose 23% year over year and that Gold subscribers held about 4.2 times the assets of the average user.

Product and trading upgrades have driven more frequent platform use, the bank said. Robinhood has added short selling, futures and a desktop trading interface, which Morgan Stanley said helped active traders trade more often. The company has begun routing prediction-market event contracts through its affiliate exchange, Rothera, giving it more control over that value chain. The analysts wrote: “We see increasing evidence that broader product capabilities are improving the economics of HOOD’s installed customer base.” They added: “Notably, our revisions come despite lower crypto forecasts.”

On forecasted results, Morgan Stanley projects revenue will grow at a 23% compound annual rate through 2028 to about $8 billion, roughly 6% above consensus. The bank expects adjusted EBITDA margins to rise to about 53% from 48% with continued expense discipline. The $150 price target is based on a 25-times multiple applied to 2031 probability-weighted earnings. The report listed potential near-term catalysts including the Sept. 29-30 HOOD Summit, developments at Rothera, the rollout of perpetual futures and early work on agentic trading capabilities.