Morgan Stanley Upgrades Robinhood to Overweight, Citing Improved Customer Monetization

Morgan Stanley upgraded shares of Robinhood Markets (NASDAQ: HOOD) to Overweight from Equal-weight, asserting that the company's expanding platform is successfully boosting revenue from its existing customers. The bank also raised its price target to $150 from $124, implying a potential 43% upside from previous levels.

Following the report, shares of Robinhood rose 2.4% in premarket trading.

The Analyst's Thesis

In a note to clients, Morgan Stanley analyst Michael Cyprys stated that Robinhood is demonstrating a clear ability to turn "product velocity into stronger customer economics." The bank sees a longer growth runway for the company than the market currently appreciates, driven by increased assets, activity, and monetization per customer.

"We see increasing evidence that broader product capabilities are improving the economics of HOOD's installed customer base," Cyprys wrote. This shift means Robinhood is no longer solely reliant on adding new funded accounts for growth but can now increasingly monetize its 28 million existing users.

Key Metrics and Projections

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Morgan Stanley's optimism is supported by several key data points and financial forecasts. The bank raised its 2026 to 2028 earnings estimates for Robinhood by 12% to 15%.

• Assets Per Customer: Up 23% year-over-year.
• Gold Users: Subscribers to the premium service hold approximately 4.2 times the assets under custody compared to the average customer.
• Revenue Diversification: Robinhood now has 13 different business lines generating over $100 million in annualized revenue each.

The investment bank projects a 23% compound annual growth rate (CAGR) for Robinhood's revenue through 2028, reaching $8.0 billion, which is about 6% above the consensus estimate. It also anticipates that expense discipline will lift EBITDA margins to 53% from 48%.

Future Catalysts

Morgan Stanley identified several potential catalysts on the horizon, including the company's HOOD Summit scheduled for Sept. 29-30. The launch of new products such as Rothera, perpetual futures, and agentic trading were also flagged as key developments for investors to watch. The bank's $150 price target is based on a 25 times multiple applied to its 2031 probability-weighted earnings estimates.