Robinhood and Strategy Snubbed by S&P 500, Interactive Brokers Jumps

Robinhood Markets Inc. (HOOD) and Strategy (MSTR) shares fell in after-hours trading on Monday following their exclusion from the latest S&P 500 index rebalancing, as the index provider S&P Dow Jones Indices announced that Interactive Brokers Group Inc. (IBKR) would be the new addition. The move reinforced the disparity in market recognition for fast-growing fintech firms, with Robinhood missing out for the second time in the year, while Strategy, a firm with significant Bitcoin holdings, also fell short.

Robinhood's stock closed the regular trading day down by 1.26% and dipped further in after-hours trading by 0.5%. The exclusion has become a recurring event for Robinhood, as it was also overlooked in June’s quarterly rebalancing. Despite the disappointment, Robinhood's shares have surged nearly 190% year-to-date, driven by a resurgence in retail investor activity and continued innovation in its trading platform. Meanwhile, Strategy's stock ended the day down by 4.17% and dropped another 0.6% in after-hours trading, mirroring the decline of Bitcoin, which fell below $110,000 for a brief period.

Interactive Brokers, by contrast, saw its stock jump nearly 6% in after-hours trading following the announcement of its inclusion in the S&P 500 index. The stock was set to replace Walgreens Boots Alliance (WBA), which is undergoing a private equity acquisition. The inclusion marked a significant milestone for the brokerage firm, which has seen its shares rise over 42% year-to-date. Analysts noted that the addition highlights a growing emphasis on digital financial services and fintech innovation within the index. Interactive Brokers’ automated platform for trading stocks, bonds, ETFs, and cryptocurrencies aligns with the evolving landscape of capital markets, further supporting its eligibility for inclusion.

The inclusion of a company in the S&P 500 index is not only a symbolic recognition but also has practical implications. It opens the door to broader investor adoption, as passive funds and ETFs are obligated to include the company in their portfolios. This can significantly increase the demand for the company's shares and improve liquidity. To qualify for inclusion, a firm must meet specific financial and market criteria, including a minimum market capitalization of $22.7 billion, U.S. incorporation, and sufficient trading liquidity.

While Robinhood and Strategy missed out on the latest inclusion, Interactive Brokers has received strong backing from analysts, with a “Strong Buy” consensus and an average price target of $67.92. The outcome of the latest S&P 500 rebalancing underscores the competitive nature of index inclusion and the evolving preferences of index providers toward companies demonstrating strong growth, innovation, and financial stability in the fintech sector.

Source: [1] Robinhood misses out on yet another S&P 500 rebalance (https://www.marketwatch.com/story/robinhood-misses-out-on-yet-another-s-p-500-rebalance-this-fintech-company-will-soon-join-instead-fb20fc90) [2] Strategy sells 875,301 MSTR shares after updating its 2.5x ... (https://finance.yahoo.com/news/strategy-sells-875-301-mstr-122717911.html) [3] Interactive Brokers Stock Jumps on S&P 500 Inclusion ... (https://www.tipranks.com/news/interactive-brokers-stock-jumps-on-sp-500-inclusion-walgreens-dropped) [4] Robinhood, Strategy Shares Dip on S&P 500 Snub (https://cointelegraph.com/news/robinhood-strategy-shares-dip-miss-sp500-inclusion)