The S&P 500 is a diversified index with very strict entry criteria.
In the last quarter of September 22, For the first time in the results of the results, the Robinhood Markets shares were added to the S&P 500.
This year, Robinhood Stock increased by more than 200%, which has crushed some of the largest names of artificial intelligence (AI) space.
10 shares we like more than Robinhood Markets ›
S&P 500 (Snigex: ^GSPC) There are 500 companies from 11 different sectors of the economy. There are several criteria, including the fact that companies must have at least $ 22.7 billion market capitalization and be profitable to take into account the location of the index. But even if these boxes are noted, the Special Committee eventually decides which candidates reduce.
The S&P 500 is re -balanced once every quarter, which means that stocks no longer meet the criteria are removed for more appropriate names. The latest re -nature occurred on September 22 when the casino operator Caesars Entertainment has been replaced Robinhood markets (Nasdaq: Hood)which manages the popular online investment platform.
Robinhood Stock sells 208 percent this year by destroying similar performances by artificial intelligence (AI) power plants Nvidia and Palantir Technologies, who returned 28% and 136% respectively. This is a very big profit. Does this mean it’s too late for investors to board this train? Read on.
Image Source: Getty Images.
There are two common parts of Robinhood’s income:
Transactions revenue related to shares processing, choosing and cryptocurrency transactions for customers.
Net interest income, which is the interest income received for their cash, and cash customers keep it on their platform. The company also earns interest on margins loans that customers use to buy shares and other financial assets.
Transaction income is a more important component as it reflects the activities of the main business. President Donald Trump’s election victory in November last year increased trade activities, but especially in the cryptocurrency space, as he promised to reduce regulation and accept policy that would increase economic growth. This change is over Great for robin.
Fourth in 2024 The company’s transactions revenue were of all time of $ 672 million. USD, and cryptocurrency income amounted to $ 358 million. USD. But the Trump bump quickly faded – just six months later, in the second 2025. In the quarter (after the end of June 30), Robinhood transactions have fallen from 20% to $ 539 million.
Many popular cryptocurrencies are currently losing the basis, so investors are more cautious. Dogecoin is 51% from 52 weeks tall, Shiba Inu decreases by 63%and XRP decreased by 24%. Even Bitcoin lost about 11% of its maximum value.
This is not the first time Robinhood has experienced a sudden cryptocurrency business. Company cryptocurrency income in the second 2021 In the second quarter, it increased by 4560% and accounted for half of its total income. However, the second 2022. In a quarter, just a year later, its cryptocurrency income decreased by 75%.
Robinhood’s decreasing income does not correspond to its rising stock prices, which may be the main problem for investors, but more about it later.
The US Federal Reserve Bank reduced the federal rate (night interest rate) three times in the last 2024. Months, and a few weeks ago, on September 17, the central bank executed the first 2025.
At the end of the second quarter, customers had $ 8.7 billion cash cash on the Robinhood platform, which almost doubled from the year. The company’s margin loan book also reached a record $ 9.5 billion.
As a result, in the second quarter, net interest revenue has actually increased by 25% per year to $ 357 million. USD. However, I would not expect the company’s margling loan books and customer cash remnants to reduce interest rates forever.
For example, the market correction of the securities market could lead to a decrease in margin loan residues as investors risk. In addition, investors can withdraw cash from their trade accounts in the event of an economic downturn, as they prefer daily expenses.
Incredible 208 percent.
Ycharts data; Ps = price to sales.
As a result, if Robinhood can find a way to achieve significant revenue growth from here, its stock can be aimed at a sudden correction. This should decrease by 67% only at a time when the P/S match the long-term 10.2 average-it is not a question as it has fallen by more than 80% after the last boom of cryptocurrencies.
Robinhood’s monthly active consumer base this year has declined in both the first and second quarters, and it will not be easy for the company to find more income when fewer customers are actively trading on its platform. Therefore, it is probably not a good idea to buy Robinhood at the moment, and investors who already own may want to purify some of their profits.
Before buying shares in Robinhood markets, consider this:
Motley Fool Stock Advisor A team of analysts just found what they think is 10 best stocks To buy investors now … and Robinhood markets were not one of them. 10 stocks that reduced the incision can return the monster in the coming years.
Consider when Netflix This list consisted of 2004. December 17th … If you have invested $ 1,000 during our recommendation, at our recommendation, You would have $ 6507 in USD!* Or when Nvidia Made this list in 2005. April 15 … If you have invested $ 1,000 during our recommendation, at our recommendation, You would have $ 1,114,716!*
Now it is worth mentioning Share advisor The average return is 1 068%-S&P 500, compared to 190 percent. Share advisor;
See. 10 stocks »
*The stock advisor returns from 2025. September 29th
Anthony di Pysio has no position in any of the above shares. Motley fools are positions and recommend Bitcoin, Nvidia, Palantir Technologies and XRP. The Motley fool has a disclosure policy.
The latest S&P 500 shares are destroyed this year by Nvidia and Palantir. Is it too late to buy? initially released by The Motley Fool
