Morgan Stanley upgraded Robinhood (HOOD) to Overweight with a $150 price target, citing the significant revenue growth from its prediction market product. This upgrade is driven by increased revenue per customer and the strategic shift towards internalizing prediction market trades through Rothera, despite a regulatory cloud in Nevada.
Morgan Stanley upgraded Robinhood (HOOD) to Overweight and raised its price target to $150, implying a significant upside. This positive outlook is primarily driven by the unexpected strength and revenue generation from Robinhood's prediction market product, which generated more revenue than stock or crypto trading in Q2. The firm also highlights Robinhood's strategy to internalize prediction market trades through its Rothera venture, which is expected to improve economics. While a regulatory challenge in Nevada poses a risk, the upgrade suggests Wall Street is increasingly recognizing prediction markets as a core earnings driver for Robinhood, potentially offsetting weaker crypto forecasts. This could lead to short-term positive momentum for HOOD, with long-term growth dependent on successful navigation of regulatory hurdles and continued expansion of prediction market adoption.