Robinhood's S&P 500 Inclusion Sparks Questions About Index Criteria

Robinhood Markets (HOOD) was unexpectedly added to the S&P 500 index in a quarterly rebalancing scheduled to take effect on September 22, according to S&P Global. This move caused an immediate positive reaction in the stock, with shares rising by approximately 7% in extended trading following the announcement. Robinhood will replace Caesars Entertainment in the index. The inclusion is expected to drive increased institutional demand as fund managers adjust their holdings to align with the updated index composition [1].

Robinhood’s inclusion contrasts with the exclusion of Michael Saylor’s Strategy (MSTR), which had been widely anticipated to join the index given its strong financial performance and industry significance. Despite meeting all inclusion criteria, Strategy’s shares fell nearly 3% after hours, wiping out gains made on Friday. The omission has raised questions among investors about the criteria and rationale behind the S&P 500 selection process, especially given the company's substantial Bitcoin holdings and market capitalization [3].

Robinhood’s stock has been volatile this year, with a decline of 2% in June when it was excluded from an earlier rebalancing. However, the company has maintained a strong position among retail investors, particularly for its role in the trading of meme stocks such as AMC Entertainment and GameStop. The company’s current market capitalization stands at $88.51 billion, with a price-to-earnings ratio of 54.60. Robinhood’s CEO, Vladimir Tenev, has previously acknowledged the difficulty in planning for such an event but expressed confidence in the company’s eligibility [1].

AppLovin, another newly added constituent, will also be included in the S&P 500, replacing MarketAxess Holdings. AppLovin’s shares have seen significant growth, rising by over 700% in 2024. The company specializes in advertising technology and is known for providing targeted ads to mobile apps and games. AppLovin’s inclusion reflects the index’s continued expansion into the tech sector, a trend that has seen other technology firms like Datadog and DoorDash added earlier this year [1].

The S&P 500 has long been dominated by technology companies, and the addition of Robinhood and AppLovin is in line with this pattern. The index now includes two cryptocurrency-related companies—Coinbase (COIN) and Block (XYZ)—in addition to Robinhood, which is actively expanding its offerings into crypto trading. This move highlights growing institutional interest in the sector and could lead to further mainstream adoption of digital assets [3].

Shares of MarketAxess, the company being replaced by Robinhood in the index, have fallen by 17% year to date, reflecting broader market conditions in the fixed-income trading sector. Meanwhile, Robinhood has been experimenting with new product offerings, including the launch of prediction markets for professional and college football games in partnership with Kalshi. This move is seen as a strategic effort to diversify revenue streams and capture a share of the growing sports betting market [2].

Source:

[1] AppLovin and Robinhood added to S&P 500 (https://www.cnbc.com/2025/09/05/applovin-robinhood-sp-500.html)

[2] Robinhood Markets: HOOD Stock Price Quote & News (https://robinhood.com/us/en/stocks/HOOD/)

[3] MSTR News: Strategy Stock Falls as Robinhood Beats It to ... (https://www.coindesk.com/business/2025/09/05/michael-saylor-s-strategy-snubbed-by-s-and-p-500-amid-robinhood-s-surprise-inclusion)

[4] Robinhood, AppLovin Additions Lead S&P 500 Index ... (https://www.investopedia.com/robinhood-applovin-additions-lead-s-and-p-500-index-changes-11804139)