Applovin Plunges 5.53% as S&P 500 Index Remains Unchanged

On June 9, 2025, Applovin's stock dropped by 5.53% in pre-market trading.

Applovin's stock price has been influenced by expectations surrounding its potential inclusion in the S&P 500 index. The company, along with other candidates like Robinhood, had seen significant gains in the lead-up to the index's quarterly rebalance. However, the announcement that the S&P 500 index would remain unchanged for this quarter led to a sharp decline in Applovin's stock price.

Analysts had anticipated that Applovin, with its substantial market capitalization and strong market presence, would be a strong candidate for inclusion in the index. The company's performance had been buoyed by expectations of increased demand from passive investment funds that track the S&P 500. However, the index's decision to maintain its current composition has dampened these hopes, leading to a sell-off in Applovin's shares.

The decision by the S&P 500 index committee to keep its composition unchanged reflects a stringent focus on companies' profitability and market liquidity. Applovin, despite its strong market position, did not meet the index's profitability criteria, which require companies to have achieved GAAP earnings in the most recent quarter and over the past four quarters. This financial hurdle has been a significant barrier for many tech companies aiming to join the index.

Investors had been optimistic about Applovin's prospects, driven by the potential for increased demand from passive investment funds that track the S&P 500. However, the index's decision to maintain its current composition has led to a sell-off in Applovin's shares, as investors reassess the company's valuation in light of the missed opportunity. The company's stock price has been volatile in recent weeks, reflecting the heightened sensitivity of investors to changes in the index's composition.