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The S&P 500’s defied expectations in 2025. Whereas requires a possible market correction and even crash are on the rise, US shares proceed to climb to new document highs, rewarding shareholders with some pretty exceptional positive factors.
Together with dividends, the US’s flagship index has generated a return of virtually 16% since January. When it comes to cash, that’s sufficient to remodel a £50,000 preliminary funding into roughly £58,000 within the house of 10 months – firmly forward of the long-term historic common of 10%.
However for some inventory pickers, the positive factors have been much more explosive, reaching into triple-digit territory!
A 235% return for inventory pickers
Whereas synthetic intelligence (AI) shares like Nvidia and Palantir have been getting many of the consideration, one other S&P 500 enterprise has been quietly surging. I’m speaking about Robinhood Markets (NASDAQ:HOOD), the commission-free buying and selling platform.
With traders getting enthusiastic about progress alternatives inside the inventory market, demand for Robinhood’s providers has organically ramped up. And for the reason that group earns its hold by way of a payment-for-order circulate (PFOF) mannequin, extra buying and selling and investing exercise equals extra income and income.
Taking a look at its newest quarterly outcomes, complete web revenues climbed 45% to $989m whereas web income greater than doubled to $386m. This all comes paired with a 41% improve in web deposits throughout its person accounts. Throw in the truth that subscriptions to its premium Robinhood Gold service have jumped by 76% to three.5 million, and it’s not so stunning that the shares are actually 235% larger for the reason that begin of 2025.
In different phrases, anybody who invested £50,000 in January has not simply overwhelmed the market, however dominated it with a £167,500 reward for his or her efforts.
However with a lot progress underneath its belt, is it too late for traders to hop aboard the gravy practice?
What to observe
Of the 25 institutional analysts watching this enterprise, 17 presently charge the inventory a Purchase or Outperform with a mean share worth goal of $145. That’s about 10% larger than the place the inventory’s buying and selling right now, suggesting there’s nonetheless some progress potential on provide.
Digging deeper, this bullish sentiment appears to revolve across the firm’s regular evolution right into a diversified monetary superapp providing investing, crypto, buying and selling, saving, and digital banking options.
It’s actually a promising technique and opens up many new avenues for long-term progress and shareholder worth creation. Nevertheless, it’s vital to recognise that in 2025, many of the income and income nonetheless come from buying and selling exercise. And that’s typically extremely cyclical.
As we’ve seen previously, when the inventory market’s thriving, Robinhood outperforms. However when shares stumble, the losses will be fairly painful. And traders truly skilled this first-hand in 2022 when the inventory fell by over 80% over the last market correction.
Throw within the regulatory uncertainty surrounding the PFOF enterprise mannequin alongside a lofty 69.2 price-to-earnings ratio, and the danger simply feels too excessive for my tastes. That’s why I’m looking for different investing alternatives inside the S&P 500 proper now.
