Robinhood Markets’ ability to monetize its existing user base isn’t fully appreciated by the market, creating an opening for investors looking to buy the stock, according to Morgan Stanley. The investment bank upgraded the trading platform to overweight from equal weight. It also hiked its price target on shares to $150 from $124, implying 43% upside from Monday’s close. “HOOD’s expanding platform is turning product velocity into stronger customer economics: more assets, activity and monetization per customer, supporting a longer growth runway than appreciated,” analyst Michael Cyprys said in a note to clients. “While investors increasingly recognize HOOD’s accelerating product velocity and expanding [total addressable market], we think the less appreciated opportunity is how these products are changing the economics of the existing customer base and extending the duration of growth.” HOOD YTD mountain HOOD year to date He noted that Robinhood’s foray into several types of new trading products should allow it to leverage its existing base of roughly 28 million users to bring in more revenue. “Prediction markets provide a proof point for HOOD’s distribution, with [less than] 2m users generating $156m of [second-quarter] revenue and adopting other products,” Cyprys wrote. Meanwhile, Robinhood’s derivatives exchange and clearinghouse called Rothera “extends HOOD’s distribution advantage into infrastructure, adding exchange economics on its own flow and potential third-party… revenue,” he added. Morgan Stanley’s call falls in line with consensus on Wall Street. Of the 28 analysts covering Robinhood, 22 have a buy or strong buy rating on the stock, LSEG data shows. Shares are roughly flat over the past year.
