Shares of Robinhood Markets Inc. (NASDAQ: HOOD) fell sharply on Monday after the online brokerage was left out of the latest S&P 500 index rebalance, defying widespread investor expectations.
The stock dropped more than 7% in intraday trading, falling to $69.78, as disappointment spread among traders who had anticipated the company’s inclusion in the benchmark index.
Robinhood had surged nearly 200% over the past year, fueled in part by speculation that it would be added to the S&P 500 during the June review.
Despite meeting key eligibility criteria—including sustained profitability and a market capitalization exceeding $66 billion—Robinhood was not among the companies selected.
The decision appeared to trigger a wave of profit-taking and momentum unwinding.
“This was a surprise to many market watchers,” said an equity strategist at Greenstone Capital. “Robinhood had the fundamentals and the trading volume to justify inclusion.
The market’s reaction reflects both disappointment and the fragility of speculative positioning.”
Robinhood’s sharp drop also weighed on peer stocks in the fintech space, with AppLovin, another candidate that was also left out, falling more than 5%.
The S&P 500 exclusion is seen by some analysts as a temporary setback, with the possibility of inclusion in a future rebalance.
Robinhood has reported consistent profits in recent quarters and continues to diversify its revenue streams beyond equity trading.
Still, Monday’s decline underscores the risks tied to index-related trading bets, especially when outcomes don’t align with market consensus.
As of Monday afternoon, Robinhood shares were trading at $69.86, down 5.02% on the day.
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