S&P 500 Index Rebalance: High-Conviction Entry Points in Fintech and Ad-Tech

The S&P 500’s September 2025 rebalance has ignited a firestorm of activity in fintech and ad-tech, with Robinhood (HOOD) and AppLovin (APP) securing coveted spots in the index. This move replaces underperformers like MarketAxess (MKTX) and Caesars Entertainment (CZR), creating a stark contrast between the winners and losers of the rebalance. For investors, this is a golden opportunity to identify high-conviction entry points in newly included disruptors while avoiding the pitfalls of excluded peers.

The Liquidity Windfall: ETF Inflows and Index Inclusion

When a stock joins the S&P 500, it triggers a mechanical buying spree from index-tracking ETFs. The Vanguard S&P 500 ETF (VOO) and SPDR S&P 500 ETF (SPY) alone saw $3.8 billion in inflows last week, with more to come as rebalancing plays out [1]. For Robinhood and AppLovin, this means immediate liquidity boosts. According to a report by Northern Trust, companies added to the S&P 500 typically see a 15–20% surge in trading volume within the first month [2].

Robinhood, for instance, has already seen its market cap hit $93.85 billion, up from $42 billion a year ago [4]. AppLovin’s free cash flow of $768 million in Q2 2025 further underscores its appeal [1]. These fundamentals, combined with index inclusion, create a flywheel effect: stronger liquidity attracts more retail and institutional buyers, driving prices higher.

Fintech’s Quiet Revolution: Why Robinhood Deserves a Second Look

Robinhood’s Q2 2025 results were nothing short of explosive. The platform reported a 105% year-over-year jump in GAAP net income to $386 million, with EPS of $0.42 beating forecasts by 40% [6]. Its user base now exceeds 30 million active accounts, a 25% increase from 2024.

What’s the takeaway? Robinhood isn’t just a crypto gateway—it’s a financial infrastructure play. Its recent partnerships with major banks and expansion into crypto custody services position it to capture a larger slice of the $1.2 trillion digital asset market [5]. Meanwhile, excluded peers like MarketAxess face margin pressures. Despite record revenue of $219.5 million in Q2 2025, MKTX’s stock is down 19.9% year-to-date, underperforming the S&P 500’s 15.1% gain [3].

Ad-Tech’s Resurgence: AppLovin’s Strategic Pivot

AppLovin’s inclusion in the S&P 500 validates its transformation from a mobile ad network to a diversified tech platform. The company’s Q2 2025 free cash flow of $768 million—up 30% year-over-year—reflects its disciplined cost management [1]. Its $400 million sale of the Apps business to Tripledot Studios also signals a strategic shift toward high-margin ad-tech services [1].

The ad-tech sector itself is undergoing an AI-driven renaissance. McKinsey notes that agentic AI is enabling autonomous ad workflows, reducing costs by 20–30% for publishers [2]. AppLovin’s early adoption of AI-driven ad targeting gives it a moat against legacy players like The Trade Desk, which saw a 12% stock surge after its July 2025 S&P 500 inclusion but lacks AppLovin’s financial discipline [6].

Long-Term Sector Trends: Fintech and Ad-Tech as Growth Engines

Fintech’s rise isn’t a fad—it’s a structural shift. Challenger banks like Chime and SoFi now hold 31% of new primary bank accounts, up from 12% in 2020 [3]. Meanwhile, AI-powered robo-advisors and real-time payment systems are driving a 15% CAGR in fintech revenue through 2028 [2].

For ad-tech, the numbers are equally compelling. Stablecoin usage alone hit $2.5 trillion in payments annually in 2024, with FedNow and blockchain-based solutions gaining traction [2]. AppLovin’s position at the intersection of AI and ad-tech makes it a prime beneficiary of these trends.

The Excluded: Lessons from MarketAxess and Strategy

MarketAxess’s exclusion highlights the risks of relying on legacy business models. Despite strong Q2 earnings, its stock fell 0.5% after-hours on the rebalance announcement [3]. The company’s exposure to fee compression—driven by low-cost trading protocols—limits its long-term upside [5].

Strategy (MSTR), another excluded peer, offers a cautionary tale. While its AI investments are bold, its stock has underperformed the S&P 500 by 30% in 2025, reflecting skepticism about its execution risk [6].

Conclusion: High-Conviction Entry Points

The September 2025 rebalance has created a clear dichotomy: Robinhood and AppLovin are positioned to capitalize on fintech and ad-tech’s long-term growth, while excluded peers like MarketAxess face structural headwinds. For investors, the path forward is simple: allocate to index-eligible disruptors with strong fundamentals and avoid overhyped legacy players.

The market’s next phase will be defined by AI-driven innovation and digital-first financial services. Robinhood and AppLovin aren’t just S&P 500 darlings—they’re the engines of that future.

Source:
[1] AppLovin Announces Second Quarter 2025 Financial Results [https://finance.yahoo.com/news/applovin-announces-second-quarter-2025-200500336.html]
[2] McKinsey technology trends outlook 2025 [https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/the-top-trends-in-tech]
[3] MarketAxess Holdings Stock: Is Wall Street Bullish Or Bearish [https://www.barchart.com/story/news/34422315/marketaxess-holdings-stock-is-wall-street-bullish-or-bearish]
[4] Robinhood Reports Second Quarter 2025 Results [https://finviz.com/news/121559/robinhood-reports-second-quarter-2025-results]
[5] 5 ETFs With Big Inflows Last Week on S&P 500's Record Rally [https://www.nasdaq.com/articles/5-etfs-big-inflows-last-week-sp-500s-record-rally]
[6] The Trade Desk Soars After Announcement of S&P 500 Inclusion [https://mlq.ai/news/the-trade-desk-soars-after-announcement-of-sp-500-inclusion/]