Morgan Stanley upgrades Robinhood, sets $150 target

Morgan Stanley upgraded Robinhood to overweight and raised its target to $150, citing strong user monetization, prediction market growth, and business expansion, despite lower crypto trading volumes.

Morgan Stanley has upgraded Robinhood Markets to overweight from equal weight and raised its price target to $150 from $124, suggesting a potential 43% upside. This upgrade reflects Robinhood’s improved ability to monetize its user base, with average revenue per user increasing and the number of funded accounts on the rise. Prediction markets have become a significant revenue driver, generating $156 million in Q2 and surpassing crypto trading revenue. Robinhood now operates 13 business lines, each producing over $100 million in annualized revenue, and is expanding into sectors like retirement, credit, advisory, and banking. The company’s infrastructure, including its affiliate exchange Rothera, is expected to further enhance margins and earnings quality. However, risks remain, such as potential slowdowns in prediction-market or asset-based revenue growth, or operational challenges with Rothera. Overall, Wall Street sentiment is positive, with a strong buy rating and an average target price of $125.11.