Robinhood Earns an S&P 500 Seat: Milestone for the Trading App Pioneer

In a landmark moment for the Fintech sector, Robinhood Markets HOOD is joining the S&P 500 index as part of the quarterly rebalance. This underscores the company’s transformation from a disruptive, commission-free brokerage app to a platform with growing institutional credibility after multiple record quarters and a surge in market capitalization.

HOOD’s Journey: From Meme Stock Mayhem to Market Mainstay

Robinhood’s lowest point came in January 2021, when the GameStop short squeeze exposed fragile risk management and collateral practices. Forced trading curbs drew congressional scrutiny, lawsuits and regulatory challenges that lingered into 2022, as billions in losses underscored the company’s dependence on volatile retail activity. The aftermath forced leadership to overhaul capital, collateral and compliance practices while shifting messaging away from hyper-growth toward resilience.

By 2024, Robinhood had regained momentum. A solid industry-wise rebound in retail trading and higher interest income drove a return to profitability, with options and crypto revenues powering record quarterly results. The company expanded its product mix, signaled expansion into crypto derivatives and laid the groundwork for deeper institutional-grade infrastructure. These initiatives marked a clear break from the post-2021 slump, positioning it as a diversified brokerage rather than a one-dimensional trading app.

In 2025, strong results extended across asset classes, fueled by surging crypto volumes and robust options activity. Improved retention and growing assets under custody highlighted a maturing platform with earnings power beyond meme-era cycles. With market cap at record highs, Robinhood’s S&P 500 debut validates its credibility, ensuring passive fund inflows and cementing its shift from survival to scale.

This year, shares of HOOD have touched 52-week highs multiple times and have skyrocketed 171.7%. In the same time frame, the industry  gained 22.1%.

Ever since Coinbase Global COIN became a part of the coveted index in May 2025, market participants have been rooting for HOOD’s inclusion. Coinbase was the first crypto-linked company to become part of the benchmark index, signaling the widespread acceptance of digital assets. Since its inclusion in the index on May 19, Coinbase shares have gained 12.3%.

Additionally, on Aug. 28, Robinhood’s close competitor, Interactive Brokers IBKR, joined the S&P 500 index. Market chatter around Interactive Brokers’ inclusion had circulated since May, and the confirmation underscored its growing prominence. With a market cap above $102 billion, Interactive Brokers has delivered consistent profitability gains, supported by increasing retail trading activity.

Robinhood’s Valuation & Estimate Analysis

Given the impressive price performance, HOOD shares are currently trading at a massive premium to the industry. The company has a 12-month trailing price-to-tangible book (P/TB) of 12.28X compared with the industry average of 2.86X.

The Zacks Consensus Estimate for Robinhood’s 2025 and 2026 earnings implies year-over-year growth of 42.2% and 20.8%, respectively. In the past month, earnings estimates for 2025 and 2026 have been marginally revised upward.

HOOD currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research