Why MicroStrategy Was Excluded from the S&P 500 While Robinhood and AppLovin Were Added

The S&P 500 index rebalancing in September 2025 sparked intense debate, particularly around the inclusion of Robinhood (HOOD) and AppLovin (APP) and the exclusion of MicroStrategy (MSTR). While all three companies met the index's quantitative criteria—market capitalization above $22.7 billion, positive earnings, and sufficient liquidity—the S&P Global Index Committee's qualitative judgment ultimately determined their fates. This decision underscores a broader shift in how index inclusion is evaluated, with business model diversification and sector representation playing increasingly pivotal roles in modern finance.

S&P 500 Inclusion Criteria: Beyond the Numbers

The S&P 500 is a market-cap-weighted index designed to reflect the U.S. economy's breadth. To qualify, companies must meet strict quantitative thresholds: a minimum market cap of $22.7 billion, positive GAAP earnings in the most recent quarter and the prior four quarters, and a trading volume of at least 250,000 shares monthlyS&P 500 stocks: List of additions and removals in 2025^[1]. However, as the committee's recent decisions illustrate, these metrics are only the starting point. The index's governance team retains discretion to prioritize stability, sector balance, and risk mitigation over rigid numerical thresholdsS&P 500 Index: What It's for and Why It's Important in ...^[2].

For example, Robinhood and AppLovin were added despite the index's historically low addition rate in 2025 (only five companies added in the past year). Robinhood, a fintech platform with diversified revenue streams from brokerage services, crypto trading, and subscription models, aligns with the index's preference for “financial stability and broad market representation”Robinhood (HOOD) Joins the S&P 500 — Why Strategy Missed the S&P 500 While Robinhood Got In — and What It Means for Michael Saylor’s Bitcoin Bet^[3]. AppLovin, a mobile app developer with a mix of advertising and in-app purchases, similarly fits the committee's focus on innovation and growth within the technology sectorBitcoin Giant MicroStrategy Denied Coveted S&P 500 Inclusion^[4].

MicroStrategy's Exclusion: The Bitcoin Conundrum

MicroStrategy, which has invested over $16 billion in Bitcoin as a corporate treasury asset, met all quantitative criteria for S&P 500 inclusion. Its market cap exceeded $25 billion, and its recent earnings (bolstered by Bitcoin's price surge) were robustStrategy Misses S&P 500 Inclusion This Month: Will It Ever Make the Cut^[5]. Yet the committee excluded it, citing concerns over its “Bitcoin-centric business model” and associated volatilityWhy Strategy Missed the S&P 500 While Robinhood Got In — and What It Means for Michael Saylor’s Bitcoin Bet^[6].

The decision reflects the S&P 500's cautious stance toward assets perceived as high-risk. MicroStrategy's stock, with a 30-day price swing of 96%, is far more volatile than the index's average. Analysts like Mark Palmer of Benchmark argue that the committee's evolving comfort with crypto-adjacent models is still limited, even as other crypto firms like Coinbase and Block have gained tractionStrategy in the S&P 500: What Does It Mean for Bitcoin and ...^[7]. The exclusion also highlights the committee's emphasis on sector balance: the S&P 500 is already overconcentrated in tech, with the top 10 stocks accounting for 35% of the index's market capS&P 500 Concentration Risk: The Hidden Threat to Your ...^[8]. Adding a company with a single-asset exposure to Bitcoin could further skew this balance.

The Index's Discretion: Stability vs. Innovation

The S&P 500's discretionary approach is not new. For instance, Interactive Brokers Group was added in 2025 for its established financial services and balanced revenue streams, while Robinhood's inclusion was justified by its broader fintech ecosystemWhy MicroStrategy and Robinhood Missed Out on S&P^[9]. The committee's focus on “market stability and diversity”Robinhood and 4 More Stocks Top List of Potential ...^[10] explains why MicroStrategy, despite its financial metrics, was left out.

This discretion has real-world implications. When the exclusion was announced, MicroStrategy's stock fell 2.1% in premarket trading, as investors had anticipated a $16 billion inflow from index-tracking fundsStrategy Stock Drops on S&P 500 Snub. It's Still a Buy, Analyst Says.^[11]. Meanwhile, Robinhood and AppLovin saw immediate price jumps, reflecting the liquidity boost from passive investment.

Future Outlook: Can MicroStrategy Still Make the Cut?

MicroStrategy's exclusion is not a permanent verdict. The S&P 500 committee reviews companies quarterly, and if Bitcoin achieves broader institutional acceptance—as seen with the rise of spot Bitcoin ETFs—MicroStrategy's case could strengthenSaylor's Strategy Ready to Join S&P 500: Bitcoin Rally Pushes Hyper to $14M^[12]. Analysts note that the company's Bitcoin treasury has generated $14 billion in operating income in Q2 2025 alone, demonstrating its financial resilienceBitcoin Faithful Bet on Saylor's Strategy Being Added to S&P 500^[13].

However, the path to inclusion remains challenging. The committee's recent emphasis on sector diversification means MicroStrategy would need to either reduce its Bitcoin exposure or see other companies delist or merge, creating space in the indexStrategy Misses S&P 500 Inclusion This Month: Will It Ever Make the Cut^[14]. For now, the decision reinforces the S&P 500's role as a barometer of mainstream economic stability, even as it navigates the disruptive forces of digital assets.