Robinhood, AppLovin Stocks Sink as Firms Not Included in S&P 500

Robinhood Markets and AppLovin shares declined approximately 7% and 6%, respectively, after S&P Global's June rebalancing excluded both companies from the S&P 500 index, contrary to some analysts' expectations. Robinhood shares had reached an all-time high on speculation of inclusion, while AppLovin faced lobbying from a short seller urging its exclusion due to alleged violations of app store policies. Despite the recent downturn, both stocks remain significantly up year-to-date.

Analysis

Robinhood Markets (HOOD) and AppLovin (APP) shares experienced notable declines of approximately 7% and 6%, respectively, on Monday after S&P Global announced no changes to the S&P 500 index in its June rebalancing, contrary to some market expectations. This development was particularly impactful for Robinhood, whose shares had reached an all-time high on the preceding Friday driven by speculation from analysts, including those at Bank of America and Barclays, regarding its potential inclusion. The failure to secure S&P 500 membership means both companies miss out on the associated benefits of increased visibility and demand from index-tracking funds for now. AppLovin's situation was further complicated by a report that short-seller Fuzzy Panda Research actively lobbied S&P Global against its inclusion, alleging the mobile marketing platform is a "nexus of a house of cards" and violates app store policies of Alphabet's Google and Apple. Despite these setbacks and the moderately negative sentiment indicated by data signals (HOOD: -0.4, APP: -0.6), both stocks maintain substantial year-to-date gains, suggesting underlying investor confidence prior to this event.

Key Decisions for Investors

• Investors should monitor Robinhood and AppLovin for share price stabilization, as the S&P 500 non-inclusion triggered a significant short-term sell-off which may present a revised entry point considering their strong year-to-date performance.