Morgan Stanley upgrades Robinhood on prediction market revenue surge

Robinhood's prediction markets business generated $156 million in the second quarter of 2026, outpacing both crypto and equity trading revenue at the retail brokerage and prompting Morgan Stanley analyst Michael Cyprys to upgrade the stock from Equal-weight to Overweight on September 1.

Cyprys set a price target of $150, up from $124, implying roughly 43% upside. His core argument is that Robinhood does not need new customers to grow — it needs to deepen revenue from the 28 million it already has. Fewer than 2 million users generated the $156 million prediction market figure. Crypto trading brought in $100 million over the same period, down 38% year-over-year. Equity trading landed at $129 million.

Contract volume reached 13.6 billion in Q2 2026, more than ten times the figure from a year earlier. CEO Vlad Tenev has described prediction markets as the fastest-growing segment in the company's history.

Cyprys raised earnings-per-share estimates for 2026 through 2028 by 12% to 15% and projects 23% annual revenue growth, reaching $8 billion by 2028 — approximately 6% above current Wall Street consensus.

A structural element underpins the revenue story. Robinhood launched Rothera, its own derivatives exchange and clearinghouse, in May 2026. Routing prediction market orders through proprietary infrastructure rather than third-party venues allows the company to capture more economics per trade and accelerates its ability to launch new contract types, including perpetual futures.