Original Title: Morgan Stanley is upgrading Robinhood stock with a $150 target, betting on user monetization
Original Author: Cris Tolomia, Quartz

Editor's note: On September 1, Morgan Stanley upgraded Robinhood's rating from "Equal-weight" to "Overweight" and raised the target price from $124 to $150, implying a potential upside of about 43% from the previous trading day's closing price. This upgrade was not based on a new round of cryptocurrency market activity, as cryptocurrency trading volumes have declined and Robinhood's stock has been relatively flat over the past year.

What Morgan Stanley is truly reevaluating is Robinhood's ability to monetize its existing user base. With products such as stocks, options, prediction markets, credit cards, retirement accounts, and wealth management gradually converging on a single platform, Robinhood's growth thesis may no longer be primarily about acquiring new users but about increasing user retention, driving more assets under management, encouraging more trading, and offering higher-value services.

The prediction market serves as the most direct validation of this thesis. Robinhood's second-quarter event-driven contract revenue reached $156 million, growing over 10x year-over-year, surpassing revenue from stock and cryptocurrency trading during the same period. Morgan Stanley believes that more importantly, this revenue is derived from fewer than 2 million users, indicating that Robinhood has yet to fully tap into its approximately 28 million existing customers.

However, this remains a valuation framework that requires ongoing validation. Whether the prediction market can sustain its current level of activity, whether users can steadily transition to other financial products, and whether Robinhood can leverage Rothera to extend its distribution advantage to trading infrastructure will determine whether this growth cycle is a short-term surge driven by event cycles or a structural shift in the platform's economic model.

Below is the translated excerpt from the original article:

Morgan Stanley is reassessing Robinhood's growth trajectory.

Analyst Michael Cyprys from the firm upgraded Robinhood Markets' stock rating from "Equal-weight" to "Overweight" and raised the target price from $124 to $150. Based on Robinhood's previous day closing price, the new target price implies about a 43% potential upside.

The core of this price increase is not how many new users Robinhood can still acquire, but how much additional revenue the company can generate from its existing users.

In a report sent to clients, Cyprys stated that as the product offering expands, Robinhood is transforming faster product iterations into a stronger per-user monetization: customers hold more assets on the platform, are more active in trading, and the revenue per customer is increasing. This may make Robinhood's growth trajectory longer than what the market currently expects.

Evaluation Logic Shifts from User Growth to Monetization per User

In the past, Robinhood was often seen as an internet brokerage highly reliant on retail trading sentiment: during active market periods, revenue growth was driven by stock, options, and cryptocurrency trading; when market sentiment cooled, trading volumes and profitability could come under pressure simultaneously.

Morgan Stanley believes that this understanding may underestimate the changes taking place at Robinhood.

By the second quarter of 2026, Robinhood's funded accounts grew by 7% year over year to about 28.4 million; at the same time, the platform is consolidating products such as stocks, options, cryptocurrencies, retirement accounts, credit cards, investment advisory, and prediction markets into a single user ecosystem.

This means that even if user numbers no longer grow rapidly, as long as customers transfer more assets, increase their usage frequency, or start using new financial services, Robinhood could still continue to increase the revenue contribution per user.

Cyprys sums this up as a stronger "customer monetization." From a valuation perspective, the market needs to evaluate not only how many new customers Robinhood can attract but also whether existing customers can transition from being single-trade users to platform users of multiple financial products.

Less than 2 million users creating $156 million Forecast Market Revenue

Forecast markets are the primary case study Morgan Stanley uses to illustrate this potential.

Robinhood disclosed that total net revenue for the second quarter of 2026 grew by 32% year over year to $13.1 billion. Of this, trading-related revenue increased by 44% to $776 million. Event contract revenue reached $156 million, growing more than 10 times year over year, surpassing the $129 million stock trading revenue and $100 million cryptocurrency trading revenue for the same period.

Event contracts allow users to take positions on the outcomes of sports events, economic data, or other real-world events and are the primary product form of Robinhood's prediction market business.

According to data provided by Cyprys, Robinhood's less than 2 million users contributed to the $156 million in revenue mentioned above, and some participants later started using other products on the platform. In this regard, the significance of prediction markets may lie not only in directly increasing trading revenue but also potentially serving as an entry point to enhance user engagement and cross-selling capabilities.

However, this inference still requires further data validation. Currently, it is not yet possible to determine solely based on one quarter whether prediction market users will remain active in the long term, nor can it be confirmed whether their usage of stocks, options, or asset management products can generate stable incremental revenue.

Rothera Allows Robinhood to Extend to Trading Infrastructure

Another variable that Morgan Stanley is watching is Rothera.

Rothera is an exchange and clearinghouse jointly operated by Robinhood and Susquehanna International Group, regulated by the U.S. Commodity Futures Trading Commission. While Robinhood is the majority owner of the joint venture, Rothera operates independently.

In June 2026, Robinhood started routing some World Cup and Major League Baseball event contract orders to Rothera. Robinhood disclosed that out of the $156 million event contract revenue in the second quarter, $17 million came from Rothera-related business.

Prior to this, Robinhood primarily acted as a retail-facing product distribution platform. By engaging with exchanges and clearing infrastructure, the company has the opportunity to cover a longer trading value chain and provide related services to third-party futures commission merchants and other institutional clients.

In Morgan Stanley's view, this may enable Robinhood to further capture trading, clearing, and infrastructure revenue beyond user acquisition. However, Rothera is still in the early stages of business expansion, and its trading volume, third-party client expansion, and actual profitability remain to be observed.

Crypto Trading Cools Off, Testing Diversification's Mettle

This rating upgrade comes at a time when cryptocurrency trading activity has weakened, reinforcing the main theme of the Morgan Stanley report.

Robinhood's second-quarter cryptocurrency trading revenue declined by 38% year-over-year to $100 million; nominal cryptocurrency trading volume on the Robinhood App decreased by 23% quarter-over-quarter, while Bitstamp volume dropped by 47%. Meanwhile, event contracts, stock trading, net interest income, and subscriptions continue to provide sources of growth.

Therefore, Morgan Stanley's upgrade this time is not a bet on a rapid rebound in cryptocurrency trading volume, but a belief that Robinhood's revenue sources are becoming more diversified. The growth of platform assets, increased user trading activity, penetration of new products, and the infrastructure revenue brought by Rothera may reduce the company's reliance on a single trading product category.

From a market pricing perspective, Robinhood is striving to shift its valuation framework from a "cyclical retail brokerage" to a "comprehensive financial platform." However, whether this transformation will hold true still depends on several key indicators: whether forecasted market revenue can be sustained after the end of major events, whether existing users will continue to adopt more products, whether platform assets and revenue per user can continue to grow, and whether Rothera can attract third-party trading volume outside the Robinhood ecosystem.

The market forecast has already proven that Robinhood can rapidly generate revenue from a smaller user base. The next question is whether this monetization ability can be replicated to a broader customer base and ultimately translate into stable, sustainable profit growth.

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