3 weeks ago
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Robinhood’s prediction markets business just did something its crypto trading desk couldn’t: grow fast enough to make a Morgan Stanley analyst genuinely excited.
Analyst Michael Cyprys upgraded Robinhood Markets (HOOD) from Equal-weight to Overweight on September 1, slapping a $150 price target on the stock, up from $124. That implies roughly 43% upside from current levels. The thesis is straightforward: Robinhood doesn’t need more customers to grow. It needs to sell more products to the 28 million customers it already has.
The numbers behind the upgrade
Robinhood pulled in $156 million in prediction market revenue during Q2 2026. That figure was generated by fewer than 2 million users, a fraction of its total base. For context, crypto trading brought in $100 million during the same period, a 38% decline year-over-year. Equity trading revenue landed at $129 million.
The volume numbers are equally striking. Robinhood processed over 13.6 billion prediction market contracts in Q2 2026, more than 10 times the volume from the same period a year earlier. CEO Vlad Tenev has called prediction markets the fastest-growing segment in the company’s history.
Cyprys raised his earnings-per-share estimates for 2026 through 2028 by 12% to 15%, even while cutting his crypto revenue forecasts. He now projects 23% annual revenue growth, reaching $8 billion by 2028. That figure sits about 6% above the current Wall Street consensus.
Rothera and the infrastructure play
A key piece of the prediction markets story is Rothera, the derivatives exchange and clearinghouse Robinhood launched in May 2026. Rather than routing prediction market orders through third-party infrastructure, Robinhood built its own venue. Rothera is now handling an increasing share of the company’s prediction market volume.
This matters for two reasons. First, owning the exchange means Robinhood captures more of the economics on each trade rather than paying fees to external platforms. Second, it gives the company more control over product design, risk management, and the pace of new contract launches.
The Rothera launch also positions Robinhood to explore adjacent products. The company has signaled interest in offering perpetual futures, a contract type that has become enormously popular in offshore crypto markets but remains relatively scarce on regulated US platforms.
What crypto’s decline tells us
The contrast between prediction market growth and crypto trading decline is worth sitting with for a moment. Crypto trading revenue fell 38% year-over-year to $100 million in Q2 2026. Prediction markets, by contrast, have fewer than 2 million Robinhood users trading prediction contracts out of a total base of 28 million.
Wall Street is mostly on board
Morgan Stanley isn’t alone in its bullishness. Of 28 analysts covering Robinhood, 22 currently rate the stock as Buy or Strong Buy.
The risk, naturally, is regulatory. Prediction markets exist in a somewhat fluid legal environment in the US. The CFTC has approved certain types of event contracts while scrutinizing others, and the boundaries between regulated derivatives and prohibited gambling products remain the subject of ongoing legal and political debate.
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