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Robinhood Markets Inc.’s prediction markets efforts offer a “proof point” that the online brokerage can keep expanding revenue, according to Morgan Stanley analyst Michael Cyprys.
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Cyprys upgraded the stock to overweight from under-weight citing Robinhood’s more than two million users generating US$156 million of second-quarter revenue while “adopting other products.”
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Robinhood is “turning product velocity into stronger customer economics,” Cyprys wrote in a Tuesday note. He flagged “more assets, activity and monetization per customer, supporting a longer growth runway than appreciated.”
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Shares rose as much as 2.1 per cent in Tuesday trading. The stock has rallied more than 60 per cent since a late-March low. Robinhood’s chief executive Vlad Tenev said in a Monday evening social media post that Robinhood Banking had crossed US$4 billion in assets.
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July’s FIFA World Cup had served as a testing ground for Rothera, the derivatives exchange that Robinhood owns along with Susquehanna International Group, while second-quarter results showed predictions markets eclipsed cryptocurrency trading. Tenev said in late July that the prediction markets business was the fastest growing in the firm’s history.
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“Rothera extends Robinhood’s distribution advantage into infrastructure,” Cyprys said.
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Cyprys also mentioned potential catalysts from perpetual futures and agentic trading, along with the company’s Sept. 29-30 event.
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Last month, Morgan Stanley strategists led by Eli Carter said that prediction markets like Kalshi were “increasingly useful” signals for investors, particularly regarding Federal Reserve policy and major United States economic data releases.
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—With assistance from Monique Mulima.
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