Analysis of Reddit Claim: Recent SPY Additions Underperform Amid Concentration Concerns

This analysis stems from a Reddit post published on December 7, 2025, which claimed recent additions to the SPDR S&P 500 ETF (SPY) – including Robinhood Markets (HOOD), AppLovin (APP), Coinbase Global (COIN), DoorDash (DASH), and The Trade Desk (TTD) – are underperforming (“duds”), while raising concerns about SPY’s concentration in NVIDIA (NVDA) and Tesla (TSLA) [0]. Market performance data confirms that most of these additions lagged SPY’s +20.13% return between March 24, 2025 (the earliest inclusion date of the group, DASH) and December 5, 2025: DASH rose 16.70%, COIN 3.83%, HOOD 6.73%, APP 6.94%, with TTD suffering a 50.60% decline [0]. TTD’s sharp drop is attributed to digital advertising market weakness and investor concerns about slowing growth [1][3].

When comparing alternative ETFs as suggested in the post, the Invesco QQQ Trust (QQQ, tracking the NASDAQ 100) outperformed SPY with a 28.24% return but exhibited higher daily volatility (1.55% vs. SPY’s 1.32%) [0]. The SPDR Dow Jones Industrial Average ETF (DIA) underperformed SPY with a 13.39% return, reflecting its exposure to lagging industrial and financial sectors [0]. SPY’s concentration in NVDA (≈7.63% weight) and TSLA (≈2.18% weight) aligns with the post’s concerns, as the ETF’s performance is increasingly tied to these megacap tech stocks [2].

Deeper analysis reveals several cross-domain insights:

1. Short-Term vs. Long-Term Performance
   : The post focuses on short-term underperformance, but historical data shows most S&P 500 additions outperform over 3–5 years, a context not considered in the original discussion [0].
2. Index Inclusion Limitations
   : The S&P 500’s criteria (market cap, liquidity, profitability) do not guarantee short-term returns, as noted in the Reddit thread’s supporting arguments. This highlights the difference between index tracking (broad market exposure) and active stock picking [0].
3. Alternative ETF Trade-Offs
   : QQQ’s outperformance is driven by high-growth tech exposure, but its higher volatility may not suit risk-averse investors, a critical caveat missing from the post’s simple recommendation [0].
4. Retirement Account Impact
   : While the thread mentions retirement accounts driving consistent buying for SPY-included stocks, this long-term demand did not offset short-term underperformance for the recent additions, suggesting other factors (e.g., sector headwinds) have greater near-term influence [0].

• TTD’s Recovery Uncertainty
  : TTD’s exposure to ad market headwinds and softer guidance [3] raises questions about its short-term turnaround potential, which could continue weighing on its contribution to SPY.
• SPY Concentration Risk
  : NVDA’s dominant weight means SPY’s performance is vulnerable to fluctuations in the semiconductor and AI sectors; any slowdown in NVDA’s growth could impact the ETF significantly [2].
• Alternative ETF Volatility
  : QQQ’s higher volatility (1.55% daily standard deviation) poses a risk for investors seeking more stable returns [0].
• Short-Term Trade Pitfalls
  : The thread suggests SPY inclusions as short-term trade opportunities due to buying pressure, but TTD’s decline demonstrates that such strategies carry risks without additional analysis [0].

• TTD’s Recovery Potential
  : If ad markets stabilize and TTD delivers improved guidance, the stock could rebound from its current low levels [1].
• QQQ’s Growth Potential
  : For investors with a higher risk tolerance, QQQ’s outperformance of SPY in 2025 reflects ongoing growth in the tech sector [0].
• Long-Term Index Addition Benefits
  : Historical trends indicate that recent underperformers may outperform over longer time horizons, offering potential for patient investors [0].

This analysis provides the following key information without making investment recommendations:

• Recent SPY additions (HOOD, APP, COIN, DASH, TTD) mostly lagged SPY’s return between their respective inclusion dates and December 5, 2025, with TTD experiencing the most significant decline (-50.60%).
• TTD’s underperformance is linked to digital advertising market weakness and softer guidance.
• Alternative ETFs QQQ (outperforming) and DIA (underperforming) exhibit different return and volatility profiles.
• SPY has notable concentration in NVDA (≈7.63%) and TSLA (≈2.18%).
• Short-term underperformance does not align with long-term historical trends for S&P 500 additions.
• Investors should consider volatility, sector exposure, and investment time horizons when evaluating alternative ETFs.