43% Upside for HOOD: Morgan Stanley Is Bullish on Robinhood Stock, Sets $150 Price Target

Morgan Stanley says Robinhood has more room for growth, upgrading the brokerage's stock to “Overweight” from “Equal Weight,” highlighting strong customer growth and increasing adoption of other products.

Morgan Stanley foresees Robinhood stock surge

Morgan Stanley researcher Michael Cyprys lifted his HOOD price target to an impressive $150 from the previous $124 target. The analyst bases his projection on the company’s expanding product offerings and rising business opportunities.

Based on Morgan Stanley’s optimistic view, the Robinhood stock price is expected to see a 43% surge from Monday’s close. The shares have already shown a positive turn, with the price increasing by about 21% in August. Over the past six months, the stock has surged by more than 36%. However, it is still down by nearly 9% year to date. Despite the recent rally, the HOOD price closed on Tuesday at $103.51, with a 1.24% downtick. During the pre-market hours, the shares declined to $102, with a 1.26% drop.

Q2 growth and prediction markets boost Morgan Stanley’s bullish views

Interestingly, Morgan Stanley’s upgrade aligns with Robinhood’s strong Q2 report. The company saw $1.31 billion in revenue in the second quarter, surging by about 32.5% from the previous year. It also reported diluted earnings per share (EPS) of $0.62, marking a notable rise from the estimated $0.44.

Trading remained a main source of income for Robinhood in the second quarter. As prediction markets gained popularity, event contracts brought $156 million in Q2 while transaction-based revenue hit $776 million. It is more noteworthy that the figure was even higher than the company’s crypto revenue of $100 million.

The event contracts growth demands special recognition. Last year, the business generated only $10 million from event contracts. This represents a staggering 1,400% surge in just one year. The company’s user base also saw a significant rise. Average revenue per user rose to $187, up 24%. Funded customers surged above 28 million, whereas the number of Gold subscribers jumped to 4.8 million.

Options traders bet on more HOOD upside

Besides Wall Street experts, options traders are also expressing their positive views on the Robinhood stock. So far, about 38,000 calls have been traded, twice the usual volume. The weekly September 4 $110 call is witnessing the highest activity as traders are opening fresh positions.

The shares’ Schaeffer’s Volatility Index (SVI) is at 56%. This is higher than only 2% of its readings over the past year. This means that options traders believe that the stock will have limited movement in the near term.