On Monday (October 27), Robinhood (HOOD) shares surged as much as 5% intraday. Analysts at Compass Point raised their price target from $105 to $161, citing revenue growth driven by stock trading, prediction markets, and cryptocurrency fees.
Compass Point analyst Ed Engel and his team stated in a report that they expect Robinhood to "report October performance trends that will significantly exceed Q4 expectations." The team maintained a "Buy" rating on the stock.
Analysts highlighted that, in addition to increased revenue from rising options and stock trading volumes, the rapid growth of the platform's "prediction market" business—launched earlier this year—was another key factor. Through this service, traders can bet on outcomes of major events, such as potential winners of football matches, the duration of a government shutdown, or Bitcoin's (BTC-USD) price range by year-end.
Engel noted, "We estimate Robinhood's Q3 revenue from prediction markets at approximately $20 million, up over 100% quarter-over-quarter."
Robinhood CEO Vlad Tenev revealed last month on X (formerly Twitter) that the total number of "event contracts" in prediction markets had exceeded 4 billion, with over 2 billion contracts in Q3 alone. Analysts pointed out that the platform earns $0.01 per contract, translating to roughly $40 million in revenue.
Engel believes this revenue figure will rise further, given the ongoing NFL season. "We project Q4 prediction market revenue to reach around $50 million, as the NFL season fully covers the quarter," he said.
Engel also noted that higher fees and "staking" services would drive growth in cryptocurrency revenue. Staking refers to token holders locking digital assets to earn rewards, similar to dividends or yield returns.
Engel wrote in the report, "We believe the market has yet to accurately price Robinhood's crypto revenue for the second half of 2025 and 2026, which includes higher fee rates and staking income."
Robinhood is set to report earnings after the market closes next Wednesday (November 5). Currently, the stock has 20 "Buy" ratings, 8 "Hold" ratings, and 1 "Sell" rating.
Year-to-date, Robinhood shares have surged over 250%. Additionally, the company was added to the S&P 500 (GSPC) index last month.