Morgan Stanley upgrades Robinhood to $150 target on prediction market growth
Morgan Stanley upgraded Robinhood to Overweight with a $150 price target, citing prediction market growth as a proof point for the brokerage's expansion beyond core trading. Robinhood users traded 13.6 billion event contracts in Q2, more than ten times the year-earlier figure, and event-contract revenue surged from $10 million to $156 million year-over-year. The Ninth Circuit ruled against Robinhood on August 28 in a case involving sports event contracts.
Wall Street has now made prediction markets a valuation pillar for Robinhood, not a side bet. Two separate firms have issued price targets above $145 that assume the $156 million quarterly revenue sustains or grows. That shifts risk from trading performance to regulatory outcomes. Any CFTC restriction or state gambling reclassification would hit earnings models harder than a revenue miss.
Robinhood routes event-contract volume through Kalshi and the Rothera joint venture, so a partner dispute would force immediate migration. The platform's next vertical integration move will set the template for how brokerages source prediction markets. Robinhood's event contracts revenue tops crypto and equities in record quarters, and competitors now face investor pressure to disclose comparable numbers.
Becomes the second major brokerage to see prediction markets become central to its equity valuation, after Piper Sandler issued a $145 target on 29.7 billion quarterly event contracts.