Robinhood shares fell sharply on Monday, tumbling more than 5% after the online brokerage was left out of the S&P 500 in the index’s latest quarterly rebalance. The decision ended weeks of speculation that Robinhood might secure a coveted spot in the benchmark index.
The stock had rallied 3.3% on Friday and gained more than 13% last week amid growing investor optimism ahead of the announcement. But after S&P Dow Jones Indices revealed after the bell that no changes would be made to the index, Robinhood’s shares sold off, dropping over 6% in early trading before paring back some of the losses.
The S&P 500 rebalance, typically conducted on the third Friday of the final month in each quarter, often sparks billions of dollars in trading activity. Companies added to the index tend to see a surge in buying from passive investment funds that track the benchmark.
Crypto exchange Coinbase recently benefited from such a move, with its stock soaring 24% in the session following its inclusion last month. Robinhood investors had hoped for a similar outcome, but Monday’s rejection delivered a sharp reversal in sentiment.
