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Robinhood shares surged after S&P Global said it would add the online brokerage to the S&P 500, ending months of speculation about its inclusion.
Shares jumped more than 15% in midday trading on Monday. That marked the stock’s biggest one-day gain since early April and third-best session in the last year.
S&P Global said Friday that Robinhood will replace Caesars Entertainment in the stalwart U.S. market index. The change will take place before the beginning of trading on Sept 22.
Robinhood, 1-day
Robinhood’s inclusion follows several months of chatter on Wall Street about whether the company could earn a spot in the benchmark average.
Companies typically vie for a place in the S&P 500 because such an addition can catalyze billions of dollars in trading. Passive funds are typically expected to buy massive numbers of shares in the weeks following a stock’s addition.
“HOOD has been one of the largest eligible names in recent rebalancings/merger openings,” Bank of America analyst Craig Siegenthaler wrote in a note to clients last month.
Shares slipped in June after the company failed to get a place in the last reshuffling. When asked about the potential to join the index at Robinhood’s annual meeting that month, CEO Vlad Tenev said he was uncertain but optimistic.
“It’s a difficult thing to plan for,” Tenev said. “I think it’s one of those things that hopefully happens.”
But the stock’s pullback was short-lived, with shares of Robinhood now up more than 210% year to date. Despite a drop during the market sell-off in 2022, the stock has mostly surged since going public in 2021.
AppLovin, which S&P Global said would also get a spot in the index, jumped more than 11% on Monday. Shares of Caesars Entertainment and MarketAxess Holdings — the two stocks being taken out of the S&P 500 — both ended the session little changed.
— CNBC’s Yun Li and Jordan Novet contributed to this report.
