Can Robinhood Stock 2x Post S&P Inclusion?

Robinhood Markets (NASDAQ:HOOD) stock has had a remarkable run in 2025, and the momentum just got another boost. The company was recently added to the S&P 500, sending its shares up by over 7% in pre-market trading on Monday, approaching $110 per share. Robinhood, best known for eliminating trading commissions and making stock investing more accessible through its user-friendly smartphone app, has seen its stock surge by over 2.5x since early January. Growth has been driven by earnings momentum, a fast-expanding user base, and growing exposure to the hot cryptocurrency market.

Now, inclusion in the S&P 500 could drive another rally. Index inclusion often gives stocks a structural boost as passive funds and ETFs tracking the benchmark are forced to buy. It also serves as a stamp of credibility and financial stability, opening the door to greater interest from institutional investors.

So could Robinhood’s stock, now at about $115, double again to $230 in the coming years? The idea isn’t far-fetched. Consider that the stock was trading at just $55 in mid-May 2025 and has already doubled in a little over three months. At roughly 60x adjusted trailing earnings, valuations may look stretched at first glance, but when paired with rising profitability, and expanding market opportunities, there’s a plausible path to a $230-plus stock price. In the sections below, we break down Robinhood’s revenues, margins, and valuation multiples to map out how this scenario could unfold.

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Big Revenue Potential

HOOD’s revenues have risen considerably from $280 million in 2019 to about $2.9 billion in 2024, an annual growth of almost 60%. Growth over the last three years averaged about 30%. It looks like the momentum can hold up. Consensus projects a close to 35% revenue growth for 2025 to about $4 billion. However, there is a real opportunity for HOOD to maintain this average annual rate of close to 35% for the next few years, led by continued customer growth for the company, significant potential in the crypto business, and wealth management solutions.

Considering this, revenues could move from an estimated $4 billion in FY’25 to around $7.3 billion by FY’27, or an over 82% increase.  Here’s a closer look at what could drive this growth. Separately, if you are looking for potential gains with reduced volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative – having surpassed the performance of the S&P 500 and produced returns of over 91% since its inception.

Monetizing a Larger Customer Base: Robinhood has proven to be agile and innovative and has a good understanding of young retail investors, and this has led to strong user growth. Funded accounts jumped by 2.3 million last quarter to 26.5 million, while platform assets nearly doubled year-over-year to $279 billion. This growing asset base is a revenue engine, enabling more trading activity, higher interest income on idle cash, and greater potential for advisory fees.

Push Into Crypto: Robinhood’s crypto revenues surged 98% last quarter to $160 million, just shy of a sixth straight quarter of triple-digit growth. The company has also been expanding its operations via acquisitions. It closed its purchase of global cryptocurrency exchange operator Bitstamp in June, providing it with over 50 active licenses and registrations internationally, while also strengthening its enterprise efforts by enhancing its lending and staking infrastructure and offering more specialized products tailored for hedge funds, fintechs, and registered investment advisors. A friendlier regulatory climate and growing political support, including from the Trump administration, have further fueled investor enthusiasm for the stock.

A Valuable, Young Demographic: Robinhood’s user base is heavily dominated by millennials and younger investors. There is a massive wealth transfer expected to move from older generations to millennials and Gen Z over the next two decades, running into tens of trillions of dollars. By acquiring these users early, Robinhood positions itself to benefit as their assets and investment needs rise over time. As millennials age, their financial needs will also diversify as time goes by. Considering this, Robinhood has begun offering products beyond just trading – such as retirement accounts, high-yield cash balances, and wealth management tools – to retain users as their financial stature increases. While this may be a longer-term theme for the stock, it is a highly significant one.

Why Margins Will Expand

Combine this robust revenue growth with the fact that HOOD’s adjusted net margins (net income, or profits after all expenses and taxes, calculated as a percent of revenues) are on an improving trajectory. They grew from negative levels in FY’21 to about 35% in FY’24. Growth has been led by strong gains in high-margin revenue channels, such as payment for order flow and margin interest. Strong growth in transaction volumes, particularly crypto, have also been helping the company.  Robinhood’s model also has considerable operational leverage, since costs do not necessarily rise with revenues. Margins could potentially trend still higher to levels of about 40% considering these trends. Now, combining 40% adjusted net margins, with about $7.3 billion in revenue, would translate into earnings of about $2.9 billion. That’s a roughly 2.9x increase from levels seen in 2024.

Strong Results, Lower P/E Contraction?

Now, if earnings grow 2.9x, the price-to-earnings multiple will shrink by 2.9x, from levels of about 21x, assuming the stock price stays the same. But that’s exactly what HOOD investors are betting will not happen. If earnings expand 2.9x over the next few years, instead of the P/E shrinking from a figure around 60x now to about 21x, a scenario where the PE metric stays at about 40x looks more likely, as strong growth and improving margins give investors more confidence about HOOD stock’s future.

The company’s addition to the S&P 500 could also help sustain a richer multiple, given the added visibility, index fund flows, and broader institutional participation that typically come with inclusion. This would make the growth of HOOD stock to levels of over $220 within the next few years a real possibility. So what about the time horizon for this high-return scenario? While our example above illustrates a roughly two-year time frame, in practice, it won’t make much difference whether it takes two years or three, as long as HOOD is on this revenue expansion trajectory, with margins holding up, the stock price could respond similarly.

While HOOD stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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