Recent developments have set the stage for significant shifts in the stock market, particularly with the announcement that the advertising technology company AppLovin and the trading platform Robinhood Markets will be included in the S&P 500 index. Effective September 22, this change has attracted considerable attention, leading to substantial stock price increases for both companies in after-hours trading.
AppLovin and Robinhood’s Inclusion in the S&P 500
As outlined by S&P Global, AppLovin is set to replace MarketAxess Holdings, while Robinhood will take Caesars Entertainment’s spot. This inclusion is notable as it underscores a moment of recognition for both companies, allowing them to be included in one of the most prestigious stock indexes in the United States.
Following the announcement, shares of AppLovin and Robinhood surged by approximately 7% in extended trading—an expected reaction, as inclusion in a major index often compels fund managers to acquire shares, thereby driving up their value.
Historical Context and Market Reaction
Both AppLovin and Robinhood went public in 2021, and since then, they have experienced considerable volatility. AppLovin’s shares have rocketed upwards, gaining roughly 278% in 2023 and over 700% in 2024, although gains moderated to about 51% in 2025 as of the last trading day. On the other hand, Robinhood has gained popularity among retail investors, particularly during the meme stock phenomenon involving companies like AMC Entertainment and GameStop.
However, the journey to this point has not been entirely smooth. Earlier in 2023, a short-seller firm named Fuzzy Panda Research publicly criticized the decision to include AppLovin in the S&P 500. This scrutiny previously caused AppLovin’s shares to drop significantly—by 15% in December when the committee ultimately chose Workday for inclusion instead.
Similarly, Robinhood faced setbacks; its shares fell by 2% in June when it was excluded during the S&P 500’s quarterly rebalancing. These events serve as a reminder of the volatile environment in which these companies operate.
What Does Inclusion Mean?
Inclusion in the S&P 500 is significant for several reasons:
Increased Visibility: Both companies will gain more attention from institutional investors and analysts, which can further support stock prices.
Liquidity: Being part of the S&P 500 means that funds that track the index will need to purchase shares, thus increasing trading volume and liquidity for the stocks.
- Credibility: Inclusion can serve as a stamp of legitimacy. For companies like Robinhood, which have been at the center of scrutiny regarding their trading practices, being recognized in the S&P 500 may enhance their credibility in the eyes of regulators and investors alike.
Issues Surrounding AppLovin and Robinhood
While the inclusion in the index represents a turning point, both companies face ongoing challenges that investors should be aware of.
AppLovin
Regulatory Scrutiny: AppLovin’s involvement in offering to buy TikTok’s U.S. operations has been met with political hurdles and scrutiny. The deal’s fate could be impacted by broader regulatory actions surrounding data privacy and app security.
Market Competition: The advertising technology space is competitive. AppLovin must continuously innovate to maintain its growth trajectory amid increasing competition from firms like Unity and AdMob.
- Dependency on Mobile Apps: AppLovin’s business model relies heavily on mobile applications. Should consumer trends shift or if regulatory pressures increase on mobile ad targeting, this could impact their profitability.
Robinhood
Reputation Risk: Robinhood has faced significant criticism for its business model, especially regarding the "payment for order flow" (PFOF) practice, which has raised concerns about transparency and conflicts of interest.
Economic Sensitivity: As a platform targeting retail investors, fluctuations in the broader market, such as downturns or economic uncertainty, could significantly impact trading volumes and revenues.
- Regulatory Environment: Robinhood is under close observation by regulators, particularly after events such as the GameStop trading frenzy. Future regulations could affect their operational model and responsibilities towards investors.
Conclusion
The inclusion of AppLovin and Robinhood in the S&P 500 marks a moment of progress for both companies, reflecting their growth and potential in the technology and financial sectors. However, while their stock prices may soar with the new index listings, investors must remain vigilant. Factors such as regulatory scrutiny, market competition, and reputational risks can significantly influence their performance in the long term.
As these two companies embark on this new chapter, stakeholders should approach with a balanced perspective, considering both their recent achievements and the challenges that lie ahead. As with any investment, understanding the broader market context and the intrinsic qualities of these companies will be crucial in assessing their future potential.
