Robinhood Upgrade Lifts Outlook After Q2 Beat
Robinhood upgrade follows record Q2 results and cites prediction markets, banking and expense discipline as levers to lift ARPU, margins and flows.
KEY TAKEAWAYS
- Morgan Stanley upgraded Robinhood to Overweight and raised its 12-18 month price target to $150.
- Record Q2 results: GAAP EPS $0.62 and net revenues $1.31 billion, driven by transaction and prediction revenues.
- Analyst said scaling non-crypto products and buybacks plus tighter expenses can lift ARPU and margins.
HIGH POTENTIAL TRADES SENT DIRECTLY TO YOUR INBOX
Add your email to receive our free daily newsletter. No spam, unsubscribe anytime.
On Sept. 1, 2026, a Robinhood upgrade followed the company's record Q2 results and highlighted prediction markets and banking as emerging revenue drivers that analysts say can improve per-customer economics and margins.
Analyst Upgrade and Outlook
Morgan Stanley analyst Michael Cyprys upgraded Robinhood Markets Inc. (HOOD) from Equal-Weight to Overweight and raised his 12–18-month price target to $150 from $124. He increased 2026–28 earnings-per-share (EPS) estimates by 12–15% and projected a 23% compound annual revenue growth rate through 2028, reaching about $8.0 billion. Cyprys also modeled EBITDA (earnings before interest, taxes, depreciation, and amortization) margin expansion to roughly 53%, up from 48%.
He cited broader product capabilities—including prediction markets, banking, retirement, and Robinhood Gold subscriptions—as key drivers improving monetization. Assets per customer rose about 23% year over year. The upcoming HOOD Summit on Sept. 29–30 and new product developments such as Rothera, perpetual futures, and agentic trading were flagged as potential catalysts.
Q2 Results and Business Mix
For the quarter ended July 29, 2026, Robinhood reported GAAP EPS of $0.62 per share, beating the $0.44 consensus by about 40%. Total net revenues reached $1.31 billion, up roughly 32–33% year over year.
Transaction-based revenue rose 44% to $776 million, led by options trading at $342 million (up 29%) and equities trading at $129 million (up 95%). Event-contract or prediction-market revenue surged to $156 million, about 15 times the roughly $10 million recorded a year earlier. Cryptocurrency trading revenue declined 38% to $100 million, falling below event-contract revenue for the first time.
Net interest revenue increased 9% to $389 million, supported by growth in interest-earning assets despite weaker securities lending and lower short-term rates. Other revenue, including Robinhood Gold subscriptions, grew about 54% year over year.
Platform assets under custody rose 32% to $369 billion, while funded customers increased 7% to 28.4 million. Average revenue per user (ARPU) was $187 for the quarter. Net deposits totaled $21.7 billion, representing an annualized growth rate near 28%. Retirement assets under custody climbed 82% to $34.5 billion. Robinhood Gold subscribers reached 4.8 million, up 39%, with Gold users holding about 4.2 times the assets of the average customer.
Capital Returns and Guidance
Robinhood repurchased $414 million of Class A common stock in Q2, equivalent to about 4.4 million shares at an average price near $94.
The company narrowed its 2026 adjusted operating expenses plus share-based compensation guidance to a $2.675–$2.775 billion range, down from a prior $2.7–$2.825 billion. Management signaled that ongoing expense discipline would support further EBITDA margin improvement.
Coverage noted varying adjusted EBITDA figures: one cited $741 million, a 35% increase with a 57% margin, while another reported $1.28 billion, reflecting different adjustment methods.
Together, the analyst upgrade, tightened expense guidance, and share repurchases support the view that scaling non-crypto products can enhance per-customer economics and margins.
