The S&P 500’s defied expectations in 2025. While calls for a potential market correction or even crash are on the rise, US stocks continue to climb to new record highs, rewarding shareholders with some fairly remarkable gains.
Including dividends, the US’s flagship index has generated a return of almost 16% since January. In terms of money, that’s enough to transform a £50,000 initial investment into roughly £58,000 in the space of 10 months – firmly ahead of the long-term historical average of 10%.
But for some stock pickers, the gains have been even more explosive, reaching into triple-digit territory!
A 235% return for stock pickers
While artificial intelligence (AI) stocks like Nvidia and Palantir have been getting most of the attention, another S&P 500 enterprise has been quietly surging. I’m talking about Robinhood Markets (NASDAQ:HOOD), the commission-free trading platform.
With investors getting excited about growth opportunities within the stock market, demand for Robinhood’s services has organically ramped up. And since the group earns its keep through a payment-for-order flow (PFOF) model, more trading and investing activity equals more revenue and profits.
Looking at its latest quarterly results, total net revenues climbed 45% to $989m while net profits more than doubled to $386m. This all comes paired with a 41% increase in net deposits across its user accounts. Throw in the fact that subscriptions to its premium Robinhood Gold service have jumped by 76% to 3.5 million, and it’s not so surprising that the shares are now 235% higher since the start of 2025.
In other words, anyone who invested £50,000 in January has not just beaten the market, but dominated it with a £167,500 reward for their efforts.
But with so much growth under its belt, is it too late for investors to hop aboard the gravy train?
What to watch
Of the 25 institutional analysts watching this business, 17 currently rate the stock a Buy or Outperform with an average share price target of $145. That’s about 10% higher than where the stock’s trading today, suggesting there’s still some growth potential on offer.
Digging deeper, this bullish sentiment seems to revolve around the company’s steady evolution into a diversified financial superapp offering investing, crypto, trading, saving, and digital banking features.
It’s certainly a promising strategy and opens up many new avenues for long-term growth and shareholder value creation. However, it’s important to recognise that in 2025, most of the revenue and profits still come from trading activity. And that’s often highly cyclical.
As we’ve seen in the past, when the stock market’s thriving, Robinhood outperforms. But when stocks stumble, the losses can be quite painful. And investors actually experienced this first-hand in 2022 when the stock fell by over 80% during the last market correction.
Throw in the regulatory uncertainty surrounding the PFOF business model alongside a lofty 69.2 price-to-earnings ratio, and the risk just feels too high for my tastes. That’s why I’m hunting for other investing opportunities within the S&P 500 right now.
