TLDR
- MicroStrategy was excluded from the latest S&P 500 rebalancing, disappointing investors.
- AppLovin, Robinhood, and Emcor Group secured spots on the S&P 500 in the latest update.
- Analysts suggest S&P committee focuses on macro factors, not individual company narratives.
- MicroStrategy remains a candidate for future S&P 500 inclusion after multiple review cycles.
MicroStrategy, led by Executive Chairman Michael Saylor, was notably left out of the latest S&P 500 index rebalancing, disappointing investors who had expected its inclusion. This decision was announced by S&P Global, which revealed that AppLovin, Robinhood Markets, and Emcor Group were among the companies to secure spots on the index.
The exclusion of MicroStrategy sent its stock down about two percent in after-hours trading, as investors had anticipated its inclusion, leading to a setback in bullish sentiment.
S&P 500 Rebalancing Brings Gains for AppLovin, Robinhood, and Emcor
The rebalancing news saw a positive reaction for AppLovin, Robinhood Markets, and Emcor Group. AppLovin and Robinhood stocks experienced significant surges in after-market trading, with Robinhood jumping more than 7.5% to $108.90, following its $101.25 close during regular hours. The rally highlighted the importance of index inclusion, as index funds and ETFs prepare to adjust their holdings ahead of the rebalancing, which will take effect before the market opens on September 22. This change will increase exposure for the newly added firms across institutional and retail portfolios.
Meanwhile, MicroStrategy’s exclusion was especially disappointing as the company had long been seen as a potential candidate due to its market size and liquidity. As the largest corporate holder of Bitcoin, MicroStrategy’s stock remains highly sensitive to cryptocurrency market fluctuations, which some analysts believe could have weighed against its approval for index inclusion.
Analysts Discuss Reasons for MicroStrategy’s Exclusion
Jeff Park, Chief Investment Officer at ProCap BTC and a former Bitwise executive, offered insight into why MicroStrategy’s exclusion was not entirely unexpected. According to Park, the decision was not about the company’s operations but how the S&P committee evaluates potential candidates. He emphasized that the committee looks at a range of macro variables, including competition and the market value of the firms under consideration, rather than focusing on internal company narratives.
Notably, Park also mentioned that the inclusion of Robinhood, which has clearly positioned itself in the market with defined offerings, was almost certain. He explained that many crypto investors often focus on company metrics, overlooking broader criteria used by the S&P committee. Despite this, Park reassured investors that MicroStrategy could still be considered in future rebalancing cycles, as companies often face several rounds of review before securing a place in the S&P 500.
