Robinhood — the app that became synonymous with meme stocks — will soon be added to the S&P 500.
The no-commission trading app has been around since the 2010s and went public in 2021. Its September 22 inclusion in the S&P 500 — the most prestigious and mainstream of indexes — marks a milestone for the company. And it could signal a turning point for the insurgent fintech industry, going from the fringes of finance to a pillar of the markets.
Robinhood first made a splash as the platform of choice for Reddit traders looking to cause havoc among traditional investors by pumping up shares in companies like Gamestop, AMC and Blackberry.
Robinhood was the subject of congressional hearings and regulatory scrutiny for the way the platform gameifies investment. Now it’s joining the list of the most important publicly traded companies in the U.S., said Ben Johnson, a market strategist for Morningstar.
“Part of it is indicative of success, and part of it means that there’s, in all likelihood, going to be a lot of new investors taking a fresh look at your stock,” he said.
Index funds — the most vanilla, passive investments — will soon include a platform built on high-risk trades. Not just meme stocks, but crypto and other exotic instruments.
But Dan Dolev, a senior analyst at Mizuho, pointed out Robinhood has gotten more vanilla itself in recent years.
“They’ve grown a lot, right? Like, they’ve become, like … a real responsible management company,” he said.
Dolev said the introduction of retirement accounts, credit cards and wealth management services have helped Robinhood take increasing market share from traditional online brokerages.
But it’s not just that Robinhood has grown up, said Tyler Gellasch, CEO of the nonprofit Healthy Markets Association. Wall Street has gotten comfy with fintech brands that aren’t so buttoned up.
“Is it gambling? Is it gaming? Is it investing?” Gellasch said. “Whether or not you think the investment products that that many people buy and sell on there are good investments or bad investments, that’s an entirely separate question of whether or not the company is a good investment or a bad one.”
And at least right now, markets seem to think it’s a good one.