Robinhood Joins S&P 500 with 237% Growth Since IPO: Market Analysis Points to Strong Potential

Key Points

• Robinhood has been granted admission to the S&P 500 Index, one of just 10 companies to make the grade so far in 2025.
• The company's mobile trading platform, expanding crypto capabilities, and growing financial ecosystem have propelled impressive growth.
• Despite Robinhood's meteoric rise, market analysts still consider the stock undervalued based on key metrics.

The S&P 500 represents the gold standard benchmark for the U.S. stock market, comprised of the nation's 500 leading publicly traded companies. To secure a position in this prestigious index, companies must meet rigorous criteria:

• Be a U.S.-based company
• Have a market cap of at least $22.7 billion
• Be highly liquid
• Have at least 50% of its outstanding shares available for trading
• Must be profitable based on generally accepted accounting principles (GAAP) in the most recent quarter
• Must be profitable over the preceding four quarters combined

Robinhood Markets is the newest addition to the S&P 500, set to join the benchmark on Sept. 22, making it one of only 10 companies granted admission thus far in 2025.

Since its IPO in mid-2021, Robinhood has dramatically outperformed the broader market, generating gains of 237% compared to the S&P 500's 48% (as of this writing). These impressive stock price gains reflect robust fundamentals, with revenue jumping 169% and net income surging 1,440% — despite initial profit challenges during the pandemic.

Yet despite this strong performance, many analysts believe Robinhood's growth trajectory is just beginning. Let's explore the opportunity and examine why market analysts remain bullish on the stock despite its seemingly premium valuation.

Democratizing Financial Markets

Financial markets were once the exclusive domain of institutional players and high-net-worth individuals. However, the past decade has witnessed a democratization of investing, with retail traders gaining unprecedented market access. Stocks now trade in fractional shares, commission-free models dominate, and trading platforms are accessible to anyone with a smartphone.

This is where Robinhood's disruptive model shines. Founded on the principle that "everyone should be welcome to participate in our financial system," the platform's digital-native design and user-friendly interface have catalyzed its rapid market penetration. The company now commands approximately 6.5% of the overall market according to CSI Market, despite facing competition from larger, established rivals.

Robinhood's strategic growth relies on three interconnected pillars. First, its comprehensive trading platform spans traditional equities, options, and critically, cryptocurrency — positioning it as a bridge between conventional finance and digital assets. Second, the company focuses on capturing greater wallet share from existing users. Finally, Robinhood continues expanding its financial ecosystem with new features and services, including its growing cryptocurrency capabilities.

Data-Driven Performance

Robinhood's most recent quarterly results validate this strategic approach. In Q2, revenue climbed 45% year over year to $989 million, driving a 100% increase in earnings per share to $0.42.

Transaction-based revenue surged 65% to $539 million, boosting average revenue per user (ARPU) by 34% to $151. Behind these financial metrics lie equally impressive operational statistics:

• Funded customer accounts grew to 26.5 million, up 10% year over year
• Premium tier Robinhood Gold subscribers increased by 76%
• Total platform assets reached $279 billion, nearly doubling with a 99% surge
• Net deposits rose to $13.8 billion, up 4%

For fintech platforms like Robinhood, performance is often evaluated using the Rule of 40, which measures the balance between growth and profitability. Any score above 40% indicates a healthy business; Robinhood's exceptional score of 112% demonstrates outstanding execution.

The company continues expanding both its service offerings and geographical footprint, highlighting significant runway for future growth across traditional and digital asset markets.

Market Analysis Remains Positive

Despite Robinhood stock's extraordinary 497% surge over the past year, market sentiment remains predominantly bullish. Of 23 analysts covering the stock in September, 14 rate it a buy or strong buy, 7 maintain a hold position, and only two assign an underperform rating.

Bernstein analyst Gautam Chhugani stands among the most optimistic, maintaining a buy rating with a $160 price target — suggesting potential upside of 36% from Wednesday's closing price.

The analyst praises Robinhood for creating the best "mousetrap" with its trading business while "building the most evolved multi-asset financial super-app, leveraging technology." Chhugani projects that Robinhood will evolve into a financial services leader for the "new generation," serving both traditional and digital asset investors.

At first glance, Robinhood stock appears expensive, trading at 55 times next year's earnings and 22 times next year's sales. However, this highlights a common valuation challenge with high-growth companies. When assessed using the price/earnings-to-growth (PEG) ratio—a metric better suited for evaluating growth stocks—Robinhood's multiple of 0.34 falls well below the 1.0 threshold typically indicating an undervalued position.

Considering Robinhood's strategic integration of traditional and crypto trading capabilities, strong execution metrics, and predominantly positive analyst sentiment, the company presents a compelling investment case as it prepares to join the S&P 500.