For much of the last 30 years, investors have had a next-big-thing innovation to captivate their attention. But in rare instances, two or more hyped trends can coexist. Though the rise of artificial intelligence (AI) is the primary headline-grabber at the moment, investor euphoria surrounding stock splits in high-profile companies comes in a close second.
A stock split is an event that allows a publicly traded company to cosmetically adjust its share price and outstanding share count by the same factor. The "cosmetic" aspect of these changes has to do with stock splits having no effect on a company's market cap or its underlying operations.
But although these changes are superficial, they're often viewed very differently by investors on Wall Street. Reverse splits, which are designed to increase a company's share price, are typically viewed as a situation to avoid by investors. Businesses that need to increase their share price are often doing so to avoid delisting from a major stock exchange and may be operating from a position of weakness.
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In comparison, investors almost always gravitate to companies announcing and completing forward splits. This type of split reduces the share price (and correspondingly increases the share count) to make it more nominally affordable for retail investors who can't purchase fractional shares with their broker. Generally, if a business needs to reduce its share price to make it more "affordable" for everyday investors, it must be doing something right from an operating standpoint.
To date, three prominent companies have announced and completed a forward stock split in 2025. One of these high-flying stocks -- which has gained just shy of 300% over the trailing-three-year period -- is becoming the newest member of the benchmark S&P 500 (^GSPC +0.77%), effective as of the start of trading today, Aug. 28.
The newest member of the benchmark S&P 500 completed its first-ever stock split this year
The phenomenal business that's forever changing the broad-based S&P 500 is automated electronic brokerage firm Interactive Brokers Group (IBKR +3.68%).
Unlike auto parts chain O'Reilly Automotive, which completed a 15-for-1 split in June, and Fastenal, which effected its ninth forward split in May since going public in 1987, Interactive Brokers had never completed a split. That changed when its 4-for-1 split was completed in mid-June.
The S&P 500, which consists of 500 of the largest (and generally profitable) public companies, tends to change a bit each year. Because of mergers and acquisitions, as well as poor stock performance, not all of the 500 components in the benchmark index stick around.
NASDAQ: WBA
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For instance, pharmacy chain Walgreens Boots Alliance (WBA +0.00%) is being acquired by private equity firm Sycamore Partners in an all-cash deal, with a potential divested asset proceed right to come for remaining shareholders. While there's no set closing date for the Walgreens deal, it's expected to wrap up before the end of the year. This means it's only a matter of time before the S&P 500 needs a new member.
Interactive Brokers Group checked all the right boxes to become the S&P 500's newest entrant and replace Walgreens Boots Alliance. It handily surpasses the minimum market cap requirement of $22.7 billion, as of July 1, 2025, more than meets than minimum monthly trading volume requirements, and has been profitable over the trailing four quarters.
Entering the S&P 500 means index funds that attempt to mirror the performance of this broad-based index will be buying up shares of Interactive Brokers Group stock.
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Investing aggressively in automation has given Interactive Brokers an edge
However, entering the S&P 500 today represents just a short-term milestone for a company that's been firing on all cylinders.
Without question, Interactive Brokers is a business that thrives off of the nonlinearity of stock market cycles. Though stock market corrections and bear markets are normal, healthy, and inevitable events on Wall Street, they're historically short-lived.
Based on an analysis from Bespoke Investment Group that was published on X (formerly Twitter) in June 2023, the average S&P 500 bear market since the start of the Great Depression in September 1929 lasted only 286 calendar days, or less than 10 months.
On the other end of the spectrum, the typical S&P 500 bull market has endured 1,011 calendar days, or roughly 3.5 times longer. Bull markets tend to encourage investors to trade and put more money to work in the stock market, which is good news for online brokers.
NASDAQ: IBKR
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But what's really helped Interactive Brokers Group stand out is its investments in technology and automation, which have been targeted at retail investors.
Aggressively investing in its platform and emphasizing automation has lowered its operating expenses and allowed the company to be more competitive in other areas where it can lure/retain retail investors. For example, Interactive Brokers offers a higher interest rate on cash held in customer accounts than its competitors provide, and its margin loan rates are notably lower than its peers. It's able to maintain these dangling carrots thanks to its prudent investments in automation.
Every key performance indicator (KPI) for Interactive Brokers is currently growing by a double-digit percentage from the prior-year period. As of the end of June, total customer accounts jumped 32% to 3.87 million from the comparable period last year, with customer equity rising 34% to nearly $665 billion. Perhaps most importantly, daily average revenue trades rose 49% to 3.55 million, which signals that its clients are trading more than ever before.
While a nearly 300% move higher for Interactive Brokers Group stock may merit a short breather at some point, the company's KPIs point to additional long-term upside.
