Robinhood, AppLovin, and more stocks could join the S&P 500 on Friday

Robinhood, AppLovin, and more stocks could join the S&P 500 on Friday

Robinhood (HOOD) shares climbed 3% on Wednesday, amid speculation that the online brokerage could be added to the S&P 500 index. This uptick follows comments from analysts suggesting that Robinhood is a prime candidate for the index's next rebalancing. The rise in Robinhood's stock came after Bank of America (BofA) analysts highlighted the brokerage's prospects in a recent meeting discussing potential changes to major indices [1].

The potential inclusion in the S&P 500 is significant for Robinhood as it would likely result in increased demand for the stock from index funds and other investment vehicles that track the S&P 500. This would not only boost the company's visibility in the financial markets but could also provide a more stable shareholder base. The analyst quote provided states, "Following our meeting, we view HOOD as a prime candidate for the S&P 500 with the next rebalancing." This endorsement, alongside the mention of other companies such as LNG, FLUT, VEEV, CVNA, ARES, and APP as top candidates for additions to the index, has contributed to the positive sentiment surrounding Robinhood’s stock [1].

Robinhood Markets, Inc. (HOOD) touched a 52-week high of $68.20 during yesterday’s trading session. Over the past three months, the stock has gained 47.1%, outperforming the industry, the Zacks Finance Sector, the S&P 500 index, and its close peers — The Charles Schwab Corporation (SCHW) and LPL Financial Holdings Inc. (LPLA) [2].

The company has been on a growth trajectory, with total net revenues witnessing a compound annual growth rate (CAGR) of 60.4% over the past five years (2019-2024), with transaction-based revenues recording a CAGR of 57.3%. The momentum continued for both metrics in the first quarter of 2025. Given the company’s focus on transaction-based revenues combined with the commission-free model and ongoing volatility in the markets, its revenues are likely to move higher [2].

Robinhood has also expanded its offerings through acquisitions and product innovations. In March 2025, the company launched Robinhood Legend, a browser-based desktop trading platform, in the United Kingdom. In the same month, it launched a prediction markets hub and Robinhood Strategies, Robinhood Banking, and Robinhood Cortex, a suite of new features, to boost the wealth management offerings for its Robinhood Gold members [2].

The company's regulatory headwinds, however, are a concern. In March 2025, Robinhood’s units agreed to pay $26 million to settle Financial Industry Regulatory Authority allegations for failing to respond to red flags about potential misconduct and not verifying the identities of thousands of customers. These hefty fines have made investors cautious about Robinhood’s operations and the sufficient internal control procedures [2].

On Wednesday, US stocks inched higher as Wall Street digested a sharp slowdown in private-sector hiring growth. The S&P 500 (^GSPC) was up about 0.1% while the tech-heavy Nasdaq Composite (^IXIC) rose roughly 0.2%. The Dow Jones Industrial Average (^DJI) was just above the flat line, building on the major indexes' strong start to the week [3].

The ADP National Employment Report showed private-sector hiring growth fell sharply last month, with private payrolls increasing by just 189,000, far below the expected 225,000. This report has put the spotlight on the labor market's resilience in the face of President Trump's tariff escalation [3].

Investors should keep an eye on how Robinhood confronts the challenging backdrop. HOOD stock is a cautious bet for investors now. Those who already own it can hold for now for a robust long-term return. HOOD currently carries a Zacks Rank #3 (Hold) [2].

References:

[1] https://finance.yahoo.com/news/robinhood-stock-rises-p-500-134556958.html
[2] https://finance.yahoo.com/news/robinhood-markets-hits-52-week-150800846.html
[3] https://finance.yahoo.com/news/live/stock-market-today-dow-sp-500-nasdaq-edge-higher-after-big-adp-jobs-miss-233247386.html