Robinhood Shares Drop After S&P 500 Inclusion Speculation Fails

NEW YORK, NY — Shares of Robinhood Markets fell 6% on Monday after S&P Dow Jones Indices confirmed no changes to the S&P 500 index. The news follows speculation that Robinhood would be added to the index. The announcement came late Friday, indicating the index would remain unchanged during its quarterly rebalancing.

Robinhood’s stock had recently surged, reaching its highest price since the company’s market debut in 2021. Investors had anticipated a potential inclusion in the S&P 500, leading to a rally in its share value. However, analysts from Bank of America had previously named Robinhood as a top candidate for the index.

At the close of trading, Robinhood’s shares dipped to $70.33, breaking a six-day winning streak. Other companies, like marketing platform AppLovin, also saw declines following the announcement, falling 4.6% to $398.7.

Phil Blancato, CEO of Ladenburg Thalmann Asset Management, commented on the volatility that often accompanies such speculative moves. “When smaller companies are looking for inclusions in the S&P or any index, it means millions of dollars could potentially flow to them,” he said. “So, speculative traders have to expect volatility because it is often the case that you’ll see something like this happen where expectations are one thing and reality is another.”

To qualify for inclusion in the S&P 500, a company must be based in the U.S., listed on a major U.S. exchange, and have a market capitalization of at least $20.5 billion, among other requirements. As of Friday, Robinhood’s market valuation stood at $66.1 billion, significantly above its initial public offering (IPO) price of $38.

Last month, cryptocurrency exchange Coinbase Global became the latest company added to the S&P 500, marking a notable milestone as the first digital asset entity to join the index. Stephens analyst Melissa Roberts anticipates the acquisition of U.S. Steel by Nippon Steel may prompt further changes in the index’s composition.