Morgan Stanley upgrades Robinhood citing prediction market growth

Morgan Stanley has upgraded Robinhood Markets Inc. to Overweight from Equal Weight, raising its price target to $150 from $124 and citing the company's rapidly growing prediction market business as a key driver of future revenue. The upgrade, announced on September 1, 2026, sent Robinhood shares higher in premarket trading on September 2, even as other cryptocurrency-linked stocks declined. Analyst Michael Cyprys, who led the call, said the market has not fully appreciated how Robinhood's expanding product lineup is 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 in a note to clients. He highlighted that Robinhood's prediction market division generated $156 million in revenue during the second quarter from fewer than 2 million users, surpassing the revenue from both stock trading and cryptocurrency trading during the same period. The prediction market growth has been explosive. Robinhood users traded 13.6 billion event contracts in the second quarter, more than ten times the volume from a year earlier.