Robinhood shares drop after the online brokerage fails to get the nod to join the S&P 500
Robinhood shares took a hit on Monday as the online brokerage was left out of the latest quarterly rebalance of the S&P 500. Despite speculation that Robinhood could earn a coveted spot in the benchmark index, the company did not make the cut, causing its stock to drop more than 3% in premarket trading.
Last week, there was optimism surrounding Robinhood’s potential inclusion in the S&P 500, with Bank of America naming it as a top candidate for the reshuffling in June. The S&P 500 rebalance, which occurs on the third Friday of the last month in a quarter, is a significant event that can trigger billions of dollars of trading activity and lead passive funds to purchase shares of newly added companies.
Cryptocurrency exchange Coinbase recently experienced a surge in its stock price after being added to the S&P 500, gaining 24% in the next trading session following the announcement. However, despite missing out on a spot in the benchmark index, Robinhood has seen a strong performance this year, with its shares doubling in price. The online brokerage reached a new record high last week, benefitting from a rebound in both stocks and cryptocurrencies.
Earlier in the year, Robinhood faced challenges following the GameStop trading frenzy and the collapse of FTX, which led to a sell-off in digital assets. However, the company has managed to bounce back and regain investor confidence. The future remains uncertain for Robinhood as it continues to navigate the volatile market conditions and compete with other online brokerages.
In conclusion, while Robinhood may have missed out on a spot in the S&P 500 this time, its resilience and ability to adapt to changing market dynamics could pave the way for future growth and success.
