Robinhood Price Target Raised
Morgan Stanley Upgrades Robinhood to Overweight and Raises Price Target to 150
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Key Points
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Morgan Stanley highlighted Robinhood's derivatives exchange and clearinghouse, Rothera, as a way to extend its distribution into financial infrastructure and potentially capture revenue from third parties.
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A sub-two-million slice of Robinhood's roughly 28 million users drove about $156 million in Q2 prediction-market revenue, with those users increasingly using other parts of the platform.
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Morgan Stanley raised Robinhood's earnings-per-share forecasts for the next three years.
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Morgan Stanley notes that Robinhood operates 13 distinct business lines, and each line generates more than $100 million in annualized revenue.
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Crypto volumes have been falling, underscoring the case that Robinhood's monetization strategy should focus on products beyond crypto.
Morgan Stanley upgraded Robinhood to overweight, raising its price target to $150 from $124 — a 21% jump Morgan Stanley. Analyst Michael Cyprys says the trading platform can squeeze more revenue from its 28.4 million users through 13 different business lines, not just crypto trading.
Robinhood's average revenue per user (ARPU) jumped 24% year-over-year to $187 in Q2, and prediction markets alone generated $156 million in quarterly revenue — already surpassing crypto's $100 million Benzinga. Platform assets now sit at $369 billion with $76 billion in net deposits over the past year.
Prediction Markets Emerge as Growth Engine
Prediction markets, where users bet on real-world outcomes, have become Robinhood's breakout product. Just under 2 million of its 28 million users drove the $156 million in Q2 prediction-market revenue Schaeffers Research. These same power users increasingly tap other platform features, creating a natural cross-selling opportunity that crypto trading alone never achieved.
Diversifying Beyond Volatile Crypto Trading
Robinhood's pivot away from crypto dependency comes as digital asset trading volumes decline. Morgan Stanley notes that each of Robinhood's 13 business lines now generates more than $100 million in annualized revenue Yahoo Finance. This spread reduces risk and lets the company tap multiple profit streams — options trading, stocks, bonds, retirement accounts, and financial advice.
Rothera Clearinghouse Unlocks New Revenue Paths
Morgan Stanley flagged Robinhood's derivatives exchange and clearinghouse, Rothera, as a hidden asset. By offering these financial infrastructure services to third-party clients, Robinhood can capture fees beyond its own retail traders Scanx Trade. This move transforms Robinhood from a consumer app into a plumbing provider for Wall Street.
Wall Street Turns Bullish on Monetization Strategy
The upgrade reflects broad confidence that Robinhood can monetize its massive user base without relying on speculative trading spikes. Morgan Stanley raised earnings forecasts for the next three years and highlighted Robinhood's $4.5 billion full-year 2025 revenue as proof the strategy works Invezz. Other analysts have already rated the stock a buy or strong buy, suggesting the rally may have room to run.
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