Interactive Brokers to join S&P 500: why is it a big deal for IBKR shares?

Interactive Brokers Group (NASDAQ: IBKR) is in focus today following news the online trading platform will soon join the S&P 500 index.

On Thursday, the multinational brokerage company will replace Walgreens Boots Alliance on the benchmark index. WBA is currently in the process of going private following a $10 billion deal with Sycamore Partners.

Interactive Brokers’ stock has been a lucrative investment over the past four months. At the time of writing, it’s up roughly 70% versus its year-to-date low in the first week of April.

Can index inclusion unlock further upside in Interactive Brokers stock?

Securing a spot on the benchmark index will likely prove meaningfully positive for IBKR stock since it often triggers a massive increase in liquidity and demand.

Why? Because becoming a component of the S&P 500 means index-tracking funds, including ETFs, are now required by law to invest in Interactive Brokers shares.

Index inclusion validates the company’s scale, profitability, and operational resilience – and stands to bring it more visibility among institutional investors, potentially attracting long-term capital.

In the long run, joining the S&P 500 could mean tightened spreads, reduced volatility, and support valuation expansion for Interactive Brokers.

For a tech-forward brokerage like IBKR, this milestone underscores its evolution from niche platform to mainstream financial player, reinforcing investor confidence and positioning it for broader coverage and capital inflows.

IBKR shares could extend gains on robust financials

According to Goldman Sachs, newly added stocks have outperformed the equal-weighted index by 4 percentage points on announcement day, with nearly 75% beating the benchmark since 2021.

However, there are ample reasons, other than index inclusion, to own Interactive Brokers stock for the long term. For starters, the multinational continues to grow at an exciting pace.

In its latest reported quarter, IBKR earned 51 cents a share (up 16% YoY) on $1.48 billion in revenue (up 14.7% YoY). In comparison, analysts were at 46 cents and $1.36 billion, respectively.  

Note that IBKR shares also currently pay a 0.51% dividend yield, which makes them all the more attractive to own for the long term.

Barclays sees upside in Interactive Brokers shares to $73

Ahead of index inclusion, a senior Barclays analyst, Benjamin Budish, recommends loading up on Interactive Brokers shares.

Budish maintained his “overweight” rating on IBKR stock and raised his price target to $73 in a recent note to clients, indicating potential upside of more than 15% from current levels.

According to him, strong trading volumes, resilient net interest income, and expanding operating margins position the online trading platform for further upside ahead, highlighting IBKR’s ability to capitalise on elevated customer activity and volatile markets.

Interactive Brokers’ tech-driven platform continues to attract both retail and institutional clients – positioning it for sustained growth.

All in all, Barclays views IBKR as a top beneficiary of the ongoing trading boom and rising investor engagement.

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