(Reuters) - Shares of Robinhood Markets (NASDAQ: HOOD ) fell 6% on Monday after S&P Dow Jones Indices made no changes to its S&P 500 membership following recent speculation that the online brokerage firm would be added to the index.
S&P Dow Jones Indices announced late Friday that it would make no changes to the components of the benchmark S&P 500 as part of its quarterly rebalancing.
Robinhood shares have rallied in recent weeks, hitting their highest level since the company's 2021 debut on the stock market on Friday as investors priced in a possible inclusion in the index.
Analysts at Bank of America touted the company as a "top candidate" for inclusion in the S&P 500 earlier this month.
Robinhood shares fell by 6.1% to USD 70.33, likely ending a six-day winning streak. Marketing platform AppLovin (NASDAQ: APP ), which also surged last week on bets that its stock price would be included, fell 4.6% to $398.7.
"If smaller companies are seeking inclusion in the S&P or another index, it means that millions of dollars could potentially flow to them without a substantial event occurring," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
So speculative traders need to expect volatility, because it happens often, with expectations being one thing and reality being another.
To be included in the index, among many other criteria, a company must be based in the USA, listed on a major US stock exchange and have a market capitalization of 20.5 billion US dollars or more.
Robinhood had a market valuation of 66.1 billion dollars at the close of trading on Friday, with its shares more than doubling in value this year and trading well above their IPO price of 38 dollars each.
Crypto exchange operator Coinbase Global (NASDAQ: COIN ) was the latest addition to the S&P 500 last month, becoming the first digital asset provider to join the index.
Stephens analyst Melissa Roberts said she expects the acquisition of S&P 500 member US Steel by Nippon Steel to be the next opportunity for a shake-up of index members.
