There’s growing chatter that Robinhood Markets (HOOD) stock will be added to the benchmark S&P 500 index on June 6 when the next quarterly rebalancing occurs.
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Robinhood is one of the largest U.S.-domiciled companies ranked by market value that isn’t currently a constituent of the S&P 500. Inclusion in the S&P 500 is highly sought after by publicly traded companies as it means mutual funds and exchange-traded funds (ETFs) that track the S&P 500 will be required to buy the stock.
Being added to the S&P 500 index usually results in a company’s stock rising sharply. An announcement of any changes to the S&P 500 index is likely to come around 5:15 p.m. New York time on June 6. Additions and subtractions to the index will likely take effect before the start of trading on June 23.
Other Candidates
Of course, HOOD stock isn’t the only candidate to possibly join the S&P 500. Other contenders include AppLovin (APP), Cheniere Energy (LNG), and Interactive Brokers (IBKR). Like Robinhood Markets, they are large publicly traded companies that aren’t currently included in the index.
Since 2022, S&P Dow Jones Indices has made changes to the S&P 500 and other indexes it manages each quarter as part of an ongoing rebalancing process, which involves adjusting the weight of each component based on changes in shares outstanding. It usually looks to large companies when making an addition to the S&P 500.
In the last quarterly rebalancing, cryptocurrency exchange Coinbase Global (COIN) was added to the S&P 500, replacing Discover Financial Services after it was acquired by Capital One Financial (COF). HOOD stock has gained 93% this year.
Is HOOD Stock a Buy?
The stock of Robinhood Markets has a consensus Moderate Buy rating among 19 Wall Street analysts. That rating is based on 14 Buy and five Hold recommendations assigned in the last three months. The average HOOD price target of $62.78 implies 12.81% downside risk from current levels.
