Robinhood has been given a Buy rating and a $170 price target by StoneX Financial, which believes the trading platform’s new Layer 2 blockchain and growing prediction markets business could generate significant further growth.
The target represents an upside of about 45% from Robinhood’s closing share price of $117.34 on Tuesday. The company’s shares fell 3.91% during the session.
StoneX Financial, the brokerage and equity research arm of StoneX Group, said nearly every major operating measure at Robinhood was “accelerating”.
In a research note initiating coverage of Robinhood, Mark Palmer, managing director and senior research analyst at StoneX, identified the company’s expansion beyond traditional retail trading as a central part of its investment case.
Robinhood reported second-quarter revenue of $1.31bn, an increase of 32% compared with the same period a year earlier. However, revenue from cryptocurrency dropped by 38%, reducing crypto’s contribution to 8% of total net revenue, compared with 16% a year earlier.
Palmer said Robinhood was increasingly investing in businesses beyond its original retail trading model.
“The company has been buying its way into exchange and blockchain infrastructure at software margins,” he wrote.
A major focus of the report was Robinhood Chain, the company’s Layer 2 blockchain, which went live on mainnet on 1 July. According to StoneX, the network had collected more gas fees over a rolling 24-hour period than any other Ethereum Layer.
Robinhood Chain’s daily fees had reached approximately $4.59m by 3 September, while its annualised revenue was close to $39m as of 29 August.
StoneX estimates that Robinhood Chain could produce $980m in revenue by the 2029 financial year, with an operating margin of 85%.
Prediction markets form the second major part of StoneX’s growth assessment. Robinhood recorded 13.6 billion event contracts traded during the second quarter. More than 5 billion contracts were traded during the World Cup alone, generating approximately $156m in revenue.
That revenue was 50% higher than in the previous quarter, underlining the rapid expansion of the business.
Robinhood also announced on Tuesday that it had reached agreements with Crypto.com and OG.com to broaden its prediction markets offering. Under the arrangements, Robinhood said it would take equity stakes in both companies and route a selection of event contracts to OG.com.
“Routing event contracts to multiple venues helps create a stronger, more diverse and resilient marketplace,” JB Mackenzie, vice-president and general manager of futures and prediction markets at Robinhood, said in a statement released on Tuesday.
“With football back and midterms fast approaching, we’re thrilled to team up with Crypto.com and OG.com for what is sure to be an exciting fall for prediction markets on Robinhood.”
The agreements come as Robinhood seeks to build a broader marketplace around event-based trading, alongside its established retail investment services and cryptocurrency operations.
StoneX’s assessment follows a separate decision by Bernstein analysts earlier in the week to maintain an Outperform rating on Robinhood. Bernstein kept its price target at $160, which implied an upside of about 31% based on Tuesday’s closing price.
StoneX’s $170 target is therefore more optimistic, reflecting its view that Robinhood’s blockchain infrastructure and prediction markets can become increasingly important contributors to the company’s revenue and profitability.
